BSBMGT502 Readings

Performance management defined

Performance management is the continuous process of improving performance by setting individual and team goals which are aligned to the strategic goals of the organization, planning performance to achieve the goals, reviewing and assessing progress, and developing the knowledge, skills and abilities of people.

Here are some other definitions:

• ‘Performance management is a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization.’ (Aguinis, 2005)
• ‘Performance management is the system through which organizations set work goals, determine performance standards, assign and evaluate work, provide performance feedback, determine training and development needs and distribute rewards.’ (Briscoe and Claus, 2008)
• ‘Performance management is a broad set of activities aimed at improving employee performance.’ (DeNisi, and Pritchard, 2006)
• ‘Performance management is the key process through which work gets done. It’s how organizations communicate expectations and drive behaviour to achieve important goals; it’s also about how organizations identify ineffective performers for development programmes or other personnel actions.’ (Pulakos, 2009)
• ‘Performance management is regarded as a continuous, future-orientated and participative system; as an ongoing cycle of criteria setting, monitoring, informal feedback from supervisors and peers, formal multi-source assessment, diagnosis and review, action-planning and developmental resourcing.’ (Shields, 2007)

Performance management is managing the business. Line managers are there to manage performance and performance management helps them to do this – It is a natural process of management. It is not an HR-directed annual ritual. And it is not simply a process of appraising people once a year. Performance management is a continuous process whilst traditional performance appraisal tended to be just an annual event.

Performance management is a powerful means of ensuring that the organization’s strategic goals are achieved. It contributes to the achievement of culture change and it is integrated with other key HR activities, especially human capital management, talent management, learning and development and reward management. Thus performance management helps to achieve horizontal integration and the ‘bundling’ of HR practices so that they are inter-related and therefore complement and reinforce each other. Performance management can also play an important part in increasing levels of employee engagement.

Aims of performance management

The overall objective of performance management is to develop and improve the performance of individuals and teams and therefore organizations. As the Lloyds Banking Group states: ‘When done well, it ensures that we are all clear about what success looks like and the part we each play in delivering this success’. A strategic approach (strategic performance management) means that performance management processes such as setting goals are explicitly designed to align individual objectives with the organization’s strategic objectives.

As noted by Verweire and Van Den Berghe (2004) performance management involves creating motivation and commitment to achieve objectives. Shields (2007) pointed out that ‘it provides performance direction and recognition without which employees will be at a loss as to the nature and level of work effort required’. Performance management aims to develop the capacity of people to meet and exceed expectations and to achieve their full potential to the benefit of themselves and the organization. It is about ensuring that the support and guidance people need to develop and improve is readily available.

A definition of what performance management systems are there to do was provided by Lee (2005):

The real goals of any performance management system are threefold – to correct poor performance, to sustain good performance and to improve performance... All performance management systems should be designed to generate information and data exchange so that the individuals involved can properly dissect performance, discuss it, understand it, and agree on its character and quality.

As explained by Shields (2007) effective performance management has two other important purposes. First, it can communicate to employees the strategic goals of the enterprise and specify what the organization expects from them in terms of behaviour and results in order to achieve those goals. This means defining what doing a good job entails. Second, it can help with relationship building between employees and their managers. Involving both managers and their staff in performance planning and review can widen the dialogue between them and enhance inter-personal trust.

A summary of what management and individuals can gain from performance management is given in Table 1.1.

Table 1.1 What management and individuals can gain from performance management

What management can gain	What individuals can gain
The opportunity to: Integrate individual, team and corporate objectives; Guide individual and team effort to meeting overall business needs; Motivate and engage employees; Recognize individual contribution; Plan individual careers (talent management); Introduce relevant and effective learning and development programmes to meet identified needs.	They will: Know what is expected of them; Know how they stand; Know what they need to do to reach their goals; Be able to discuss with their manager their present job, their development and training needs in their future.

What is the legal environment of HRM?

Managers are not completely free to choose whom they hire, promote or fire. As a manager, it will be important for you to know what you can and cannot do, legally. HRM practices are governed by laws, which vary from country to country. Within countries, state or provincial and local regulations further influence specific practices. Although these regulations have significantly helped to reduce employment discrimination and unfair employment practices, they have, at the same time, reduced management's discretion over HR decisions. Consequently, managers need to constantly scan their regulatory environment and keep abreast of legal requirements.

What are the primary laws affecting HRM in Australia?

Legislation relating to HRM in Australia deals primarily with conditions of employment and work. Table 6.1 illustrates the major federal Acts that influence HRM in Australia. As you can see, they mostly deal with how employment conditions can be determined (e.g. Fair Work Act 2009), ensuring that conditions are fair and equitable rather than discriminatory (e.g. Disability Discrimination Act 1992, Equal Employment Opportunity Act 1987, Sex Discrimination Act 1984) and providing a safe workplace that protects individuals (e.g. Crimes Act 1914, Privacy Act 1988). To understand exactly how regulation and legislation influence managerial decisions, let's consider anti-discrimination legislation.

Acts such as the Equal Opportunity for Women in the Workplace Act 1999 specify that decisions about employment should be made on the basis of merit. As a result, today's employers must ensure that equal employment opportunities exist for job applicants and current employees. Decisions regarding who will be hired, for example, or which employees will be chosen for a management training program must be made without regard to race, sex, religion, age, colour, national origin or disability. Exceptions can occur only when special circumstances exist. For instance, a local fire brigade can deny employment to a firefighter applicant who is confined to a wheelchair, but if that same individual is applying for a desk job, such as a dispatcher in the radio room, the disability cannot be used as a reason to deny employment. The issues involved, however, are rarely that clear-cut. For example, employment laws protect most employees whose religious beliefs require a specific style of dress—robes, long shirts, long hair and the like. However, if the specific style of dress may be hazardous or unsafe in the work setting (e.g. when operating machinery), a company could refuse to hire a person who would not adopt a safer dress code.

Table 6.1 Major Federal HRM Laws

ACT	DESCRIPTION
Crimes Act 1914	Establishes superannuation entitlements for the majority of Australian workers.
Disability Discrimination Act 1992	Aims to eliminate, as far as possible, discrimination against persons on the ground of disability in certain areas, including employment.
Equal Employment Opportunity (Commonwealth Authorities) Act 1987	Promotes equal employment opportunity for a range of identified groups including Indigenous Australians, migrants whose first language is not English and persons with a physical or mental disability.
Equal Opportunity For Women in the Workplace Act 1999	Promotes the principles that employment for women should be on the basis of merit, that discrimination against women in relation to employment matters should be eliminated, and that employers and employees should consult about issues concerning equal opportunity for women in relation to employment.
Fair Work Act 2009 and Fair Work Amendment Bill 2012	Provide processes for making workplace employment agreements and addressing workplace disputes and conflict. Also specify minimum terms and conditions for employment and provide specific protection against unfair dismissal, unlawful termination and discrimination.
Work Health and Safety Act 2010	Aims to provide a balanced and nationally consistent framework for securing the health and safety of workers and workplaces by: promoting improvements in work health and safety practices; eliminating and minimising risks arising from work; providing for fair and effective workplace representation, consultation, cooperation and resolution of issues related to work health and safety; promoting the provision of advice, information, education and training in relation to work health and safety; and establishing effective and appropriate compliance and enforcement measures.
Privacy Act 1988	Establishes a nationally consistent approach and National Privacy Provisions for the handling of personal information by government agencies, private sector organisations and health service providers.
Sex Discrimination Act 1984	Aims to eliminate, so far as is possible, discrimination against persons on the grounds of sex, marital status, pregnancy or potential pregnancy.
Superannuation Guarantee (Administration) Act 1992	Establishes superannuation entitlements for the majority of Australian workers.

Allocating work

Each job comes with its role and responsibilities. In the main, people are recruited for their ability to do the job, but there are likely to be times when your team has to take on new tasks or focus on new objectives. You then have to decide, who does what. The way you make and convey your decision will impact on the environment you create.

Adair on leadership

John Adair, management guru specialising in exploring the art of leadership identifies three team needs:

• The need to work towards common objectives.
• The need for the individual to be nurtured.
• The need for the team bonds to be nurtured.

An effective leader achieves a high performing team by catering for all these needs.

In Adair’s terms this would be seen as focusing on the task at the expense of other needs in the team. Careful consideration should not only be given to the requirements of the job but also to:

• The current abilities and workloads of your team members;
• Any potential it might offer as a development opportunity.

The requirements of the job

From the outset you need to be clear about what the job, or task, involves. Key questions to ask include:

• What are its objectives and/or performance measures?
• How urgent is it?/When does it have to be done by?
• When could it be started?
• What skills and knowledge are needed to do it?

The current abilities and workload of your team members

This is about knowing your team. Through regular one-to-one meetings you’ll know the capabilities and workloads of each person as well as knowing any additional pressures or stresses. This takes time, but there are no short cuts when it comes to building the sorts of relationships which will result in high performance.

Potential as a development activity

In some cases a task will be new to everybody in the team, so someone will have to learn to do it. Some demand specialist knowledge and training, which not every member of the team will have. However, there are likely to be times when you have the option of deliberately allocating the task to a member of staff as a development opportunity.

There are lots of advantages of having a ethos where development is encouraged and supported. Things to consider include:

• Is there time to use it as a development activity? Some jobs need to be done as quickly as possible and there is no time to do anything other than select the most appropriate person.
• Who will provide support? It may be you or another member of the team. Whoever it is, they must have the skills to ensure that the support is effective.

Be transparent about who you select. Tell your team why a certain piece of work has been allocated or why it’s being used as a development activity. It saves misunderstandings emerging and gives people a chance to input their views – just in case you missed something.

Developing job roles

Confucius was right. If you enjoy what you are doing it doesn’t seem like work. You will also be prepared to put more into it because you enjoy it. In other words, it will increase your motivation. Therefore look for ways that you can let job roles evolve. As business objectives change there can often be scope for aligning job description with new directions. If not, look for ways you could rotate responsibilities or develop people to have greater flexibility in the skills they offer.

Summary

• To get the best out of people you have to create a culture which is motivating to work in.
• Your behaviour will have the biggest influence on the culture of your team.
• Being an effective communicator prevents a lot of problems. Check how your communication skills are perceived by your team. Improve them if necessary.
• Make time to listen; it sends people a clear message that they are valued.
• Recognise achievements and successes. If something has gone well – say so.
• Always show trustworthy behaviour. You don’t have to trust others but they should be able to trust you.

Think about the roles and responsibilities of the people you manage. Are there ways you could improve the content of their jobs?

The Question is The Answer: Developing Key Performance Questions (KPQs)

The nature of KPIs is to provide answers. But answers to what?

There is no point wasting time and energy sourcing answers to questions you didn’t ask or couldn’t care less about. To ensure that you don’t I developed a concept called Key Performance Questions (KPQs). When it comes to developing KPIs the question is actually more important than the answer – at least it is at the start of the KPI development process. You need to know what questions you need answers to before you develop your KPIs. And those questions are KPQs. Essentially a KPQ is a management question that captures exactly what you need to know when it comes to each of your strategic objectives.

The rationale for KPQs is that they trigger a search for meaningful answers and focus your attention on what actually matters – what you need to discuss to improve performance. More importantly, they provide guidance for choosing the right performance indicators. For example, you may be able to work out the average age of your customer but does that information help you achieve your objectives? If it doesn’t, you don’t need to know it!

Business is tough enough without making it tougher with unnecessary KPIs.

Harnessing the power of questions

The main reason for strategic performance management is to improve future performance. Improvement in anything depends on learning. Real learning is only possible when you take the time to reflect on past results and reflection is facilitated by questions. Just think about it for a moment: When I ask you a question it triggers a search mechanism in your brain. This is the start of a thinking and reflection process which constitutes the beginning of learning. KPQs are therefore essential components of good performance management because they help to put the data into context and turn it into actionable knowledge (see Figure 5-1).

KPQs help you to identify your information needs and ask yourself: ‘What is the best data and management information we need to collect to help us answer our key performance questions?’ As a result the KPQs ensure that, by default, all your subsequently designed performance indicators are relevant to your business.

KPQs help you and your executive team to:

• See the wood from the trees regarding what’s important and what’s not.
• Identify the most important unanswered questions in your business.
• Understand the relevance of the data sought because KPQs indicate to everyone what your company’s biggest concerns are.
• Open communication and guide discussion.
• Make better evidence-based decisions.

KPQs help everyone to appreciate and stay focused on the key concerns of the business.

Creating good key performance questions (KPQs)

There is a right and wrong way to go about creating your KPQs. For a start you need to get comfortable with asking questions! As children we ask questions constantly, irritating our parents with endless curiosity and ‘But why’s’.

Then we grow up and we stop because we don’t want to look like we don’t know the answer. After a few years in business we can almost be afraid of questions because the pressure to have all the answers is so acute. And yet businesses that facilitate a very open, questioning culture always out- perform those that don’t.

There are ten steps to ensure that you create good KPQs:

• Identify one to three high level KPQs for each strategic objective on your strategy map.
• Make sure that your KPQs are performance related.
• Engage your colleagues in the creation of the KPQs.
• Make your KPQs clear, short and punchy.
• Phrase your KPQs as open questions.
• Make sure you KPQs focus on the present and future.
• Seek to refine and improve your KPQs over time.
• Use your KPQs to guide your KPIs so they deliver relevant and meaningful information that answers your KPQs.
• Use your KPQs to challenge and where necessary refine your existing performance indicators.
• Include your KPQs in the reports you communicate within the business to review performance.

Examples of KPQs

Some powerful KPQs might be:

• To what degree are our customers likely to recommend us to others?
• To what extent are we growing profit margins among our new customers?
• How well do we facilitate innovation in our culture?
• To what extent are we raising customer lifetime value?
• How engaged are our employees?
• To what extent do our project teams trust each other?
• How well are we communicating our strategy internally?
• To what extent are we improving customer loyalty in segment X?
• How well are we promoting our products and services in China?
• To what extent are we growing market share in the South West region?

Finalising Your KPIs: Applying the KPI Design Template

To help you design your KPIs I’ve developed a KPI design template. Ideally you should use this in conjunction with the KPI decision framework described earlier. The template helps you to eradicate the ambiguity, ambivalence, and inconsistency that can so often creep into data collection and KPI reporting.

If your KPIs are to become the basis for strategic execution, growth, learning and evidence based decision-making everyone must understand what the KPIs mean, why they are needed, how reliable they are, where the data comes from, how it’s collected while also identifying the KPI targets.

Use this design template to develop completely new KPIs that deliver the answers you need or improve the effectiveness of your existing

The basics

The first four elements of the KPI design template address the basics of each KPI and help to put it in context.

Strategic Objective

It’s always best to clearly specify to which strategic objective the KPI relates, so that everyone looking at the KPI immediately appreciates its relevance.

If appropriate you can also identify the person(s) or function(s) responsible for the management and delivery of the strategic objective that the KPI is assessing. This may be an individual executive or employee, or a team of people. Clarifying ownership in this way allows you to know who to call in the future should you need to discuss performance, or fine-tune the KPI.

Audience and Access Rights

Here you define the primary audience for this KPI – basically, who will see the data and who will have access to it.

Sometimes it is possible to define a primary and a number of secondary audiences. For example, the primary audience for financial information might be the senior leadership team, and secondary audiences might include share- holders, analysts and other functional managers within the business.

Key Performance Question (KPQ)

For each KPI, state the KPQ that the indicator is helping you to answer.

Again this helps to provide context around why this particular indicator is being introduced and on which specific issue it is going to shed more light. It puts the KPI in context and helps keep people engaged in its on-going measurement.

How will and won’t the data be used?

Specify how the KPI will be used; for example, share the decision(s) the KPI is helping you make. This provides even greater context, so that everyone who uses the KPI or comes across the KPI is clear about how you plan to use the information and evidence it provides.

This is especially important if you are introducing a suite of new KPIs, because it helps to reassure everyone involved that every one of the KPIs has a very specific purpose and is not just added to make the initiator look good!

Another part of this section is to define how the KPI will not be used. Sometimes, people are scared to report on measures because they fear negative results could be used against them. Here, you can say that the KPI won’t be used to determine the performance of individuals and won’t be linked to bonus payments.

Completing your KPI Template

The rest of the KPI template covers the more technical aspects of the data collection. It’s essential that you consider the strengths and weaknesses of the different data collection methods and how appropriate they are for you and your business.

As designer of the KPI you should include the elements in the following sections.

Indicator name

Every KPI needs a name so that you can discuss it collectively and everyone knows exactly what is being discussed. Choose a name that clearly explains what the indicator is about.

If the KPI you have chosen to measure already has a name, make a special effort to ensure that everyone is on the same page. Too often in business we use language or jargon that means something different to different people. This can cause problems, so double check that everyone is talking about the same thing.

Data collection method

Identify and describe the data collection method you are going to use for each KPI. It’s important to keep the strategic objective and KPQ in mind when you do this. Too often the decision about which data collection method to use is an automatic response based on traditional methods, past experience or plucking the latest one discussed in management journals. It is far better to really engage with the challenge and consider the strengths, weaknesses and appropriateness of different data collection methods.

Targets and Performance Thresholds

Define a target or benchmark for each indicator – for example, grow our revenues by 20 per cent over the next 12 months. Here you can also outline the performance thresholds, that is, when performance levels are judged to be good or bad. A common way to do this is to institute a traffic light system where red represents bad performance or target missed, amber (or yellow) is flagging up minor issues and green is good performance or on target. Some companies prefer to add another one – usually blue – to indicate target exceeded, which in most cases is a good thing but could indicate too much effort is put into one area maybe to the expense of another.

Scale Types

Many different types of scale exist:

• Nominal: Differentiates between items based on names or categories such as gender, nationality or language.
• Ordinal: Differentiates between items based on rank order such as determination of more or less, star ratings etc.
• Interval: Differentiates between items based on intervals, where the steps of the interval are the same, but you can’t claim that 10 is half of 20 such as temperature in Fahrenheit or Celsius.
• Ratio: Is the highest form of measurement scale, where we look at an interval scale that has a true zero, so that you can claim that 10 is half of 20. Example include length, time, or temperature in Kelvin.
• Likert scale: Determines the extent to which the respondent agrees or disagrees with a statement. A typical Likert scale is: 
  1. Strongly disagree
  2. Disagree
  3. Neither agree nor disagree
  4. Agree 
  5. Strongly agree

The scale you choose is very important because it has implications on how you can use the data. For example, a nominal scale just tells you if something is one thing or the other – it doesn’t reveal any order or relative size. An ordinal scale adds more depth by telling you whether something is bigger or better than another although it won’t tell you how much bigger or better. The Likert scale can be used to deter- mine how much bigger or better.

Different options exist to extend the classic 5-point Likert scale and to change between odd-numbered and even-numbered scales. The danger with odd-numbered scales is that there is, by definition, a middle value which represents a neutral, undecided or neither agree or disagree response. This can become an easy option or cop-out for respondents. Even-numbered scales avoid this scenario because they don’t provide a neutral response. As a result, even-numbered scales are often called forced-choice response scales because they force the respondent to get off the fence one way or the other. Forced-choice questions are useful tools if respondents are reluctant to state their preferences.

Formula, scales and assessment criteria

It’s important to specify the formula, scale or assessment criteria that will be used for the KPI so that you create uniformity around the data, and so that everyone is talking the same language. Is it possible to create a formula? Is it an aggregated KPI (where for example overall sales revenue is aggregated by adding all the sales revenues from the business units) or index that is com- posed of other indicators (for example, a quality index could be composed of waste levels and rework levels)? Are you using a scale?

Source of the data

Your KPI template should specify where the data is coming from so that people using the KPI can be assured of its reliability and validity.

For example, if you decide that the best way to collect customer sentiment is through interviews, questions may arise about how reliable that data is. People are not always as honest as they could be in that environment, so interviews in this context are likely to give a distorted picture of what’s really going on.

Data Collection Frequency

You need to specify how often the data for the KPI will be collected and coordinate the dates when data is collected.

Some KPIs require data to be collected continuously. Others specify hourly, daily, monthly, quarterly or annual collection. It’s important to know why you are choosing the frequency so you can make sure the data is only collected as often as it’s actually needed. If you wanted to lose weight you would make the best decisions if you knew what you weighed every day; you wouldn’t gain anything if you chose to weigh yourself every hour. It would just waste time and energy.

Data Reporting Frequency

You need to specify when and how often the data for the KPI will be reported. It might go into the weekly or monthly performance report or be updated on the performance dashboard on a bi-weekly basis.

Who measures and reviews the data

Your KPI framework should also specify the individual or job title of the person responsible for the data collection and data updates. It is always preferable to name a specific individual because the job is more likely to get done that way.

The owner of the KPI can be a named employee or business function, or, increasingly, an external agency; many businesses are outsourcing data collection for some KPIs. This is especially common for KPIs connected to qualitative issues such as customer satisfaction, reputation, brand awareness and employee engagement.

Make sure you also clarify whether there are any review or sign-off cycles. Often one person will be responsible for collecting the data, including data input, and another person will be responsible for cross-checking or signing- off the data before it is released.

Expiry and revision dates

Your KPI template should always include an expiry date or revision date. KPIs are sometimes only needed for a specific period of time, perhaps during a particular project or restructuring process. Without an expiry or review date these KPIs can continue indefinitely, causing unnecessary work.

Even if indicators are not time- or project-specific they should be assigned a review date which is in the diary of everyone involved. When that date rolls around you re-visit the KPI to ensure it remains relevant and useful. If it’s no longer relevant then delete the KPI.

How good is the indicator?

Following the KPI decision framework allows you to develop the right KPIs and only the right KPIs. The final part of the process establishes how good your KPI is in terms of cost, completeness and ability to manipulate.

How much will it cost?

Introducing and maintaining a KPI can be expensive. It follows, therefore, that you need to estimate the costs involved so you can make sure it’s all worth it. That estimate should also be included in your template to remind you of that assumption should anything change that would require you to re-evaluate the validity of the KPI.

Costs can include the administrative costs or outsourcing costs for collecting the data, as well as the efforts needed to analyse and report on the performance.

How complete is this indicator?

By now you will have worked through all the key aspects of the KPI and will be able to determine how confident you are that the KPI will help you answer your KPQs and support your decision making.

For financial KPIs. your confidence is probably high, since long-established and widely used KPIs are used to measure performance In this area However you may not be as confident measuring intangibles such as organisational culture, employee competencies or brand Image and reputation. It’s important to acknowledge this and assess your confidence level, because doing so forces you to think about how confident you are that the KPI will actually measure what it was designed to measure.

You can express your confidence in the KPI In a variety of different ways:

• As a percentage from 0 to 100 per cent
• As a grade from Ito 5
• As a colour code such as red, amber and green
• As symbols such as smiley faces or frowns.

In whatever way you choose to express your confidence level, include a brief written comment to clarify the level of confidence and explain the limitations of the KPI.

Being aware of any unintended consequences

In the development process you will already have thought about the various ways the KPI can potentially be manipulated or how people can cheat. Make a note of these. If you discover new ways, add them to the list. Reflecting on possible KPI dysfunctions allows you and the people using the KPI to consider even better ways of collecting and assessing performance. Calling these behaviours out at the start can help to stop people from trying them and alert everyone to monitor for those behaviours.

Together, the KPI decision template and the KPI design template provide powerful tools to make any KPI development project a success. In the sample KPI template you can find two practical examples of how the template could be completed for the NPS (Net Promoter Score) and profit margin KPI.

Designing Risk Controls

Selection of controls

This chapter considers the types of controls that can be introduced when responding to individual risks. It is helpful to identify the type of control that is being introduced, because there is a hierarchy of controls – those at the top of the following list are likely to be more effective than those further down. The various types of controls can be described as:

• preventive controls designed to prevent the risk occurring and are related to the risk response ‘terminate’;
• corrective controls that reduce the likelihood and or potential impact of risks that do occur and are related to the risk response ‘treat’;
• directive controls that depend on instructions or directions on how to behave should the risk occur and are related to the risk response ‘transfer’; and
• detective controls that identify circumstances when the risk has occurred and are related to the risk response ‘tolerate’.

As with all classification systems, they may not be precise and or helpful in all circumstances. Also, there are certain controls that will be one type of control in certain circumstances and another type in slightly different circumstances. For example, validation of bank transfers by requiring two members of staff to independently login to the company bank account and authorize the transaction is designed to prevent fraud. If it is rigidly enforced, it may be considered to be a preventive control. However, this is more likely to be a corrective control that reduces the likelihood of fraud occurring, because the control would be defeated if there were collusion between two members of staff.

Perhaps the more important distinction when considering types of controls is to divide them into controls that are introduced before the event occurs and those that come into force after the incident. Preventive and corrective controls are designed to prevent the risk event occurring, although corrective controls will also act to reduce the likelihood and/or potential impact if the risk does occur. It is sometimes difficult to measure the effectiveness and efficiency of preventive and corrective controls, because there should be limited experience of the risks occurring.

Directive and, especially, detective controls are post-incident controls. Directive controls depend on the implementation of instructions or directives that have been given before the event, but need to be implemented after the event. The best examples of directive controls are those related to disaster recovery and business continuity plans. These represent a coordinated set of directions that should be followed if a specific event or set of circumstances occur. Transfer of risk by insurance or contract is a directive control, because the insurance or other contract will direct the parties as to how they should behave in the event of a loss.

It can, therefore, be seen that directive controls are not the strongest types of controls, because they depend on all parties being familiar with the requirements and acting as expected by the other party and as required by the contract. Breach of contract allegations, including breach of insurance contracts, are commonplace in business. Another example of the weakness of directive controls relates to the use of safety equipment. Safety equipment is only effective if it is properly maintained and used and this will not always be the case.

Finally, detective controls are also post-incident controls. These are described in more detail in the paragraphs that follow, but it is obvious that detective controls are based on identifying circumstances where the risk has occurred. These circumstances are then analysed, so that enhanced cost-effective controls to prevent the risk materializing again, perhaps with greater consequences, can be introduced.

Preventive and corrective controls

Preventive controls are designed to limit the possibility of an undesirable outcome being realized. The more important it is to stop an undesirable outcome, the more important it is to implement appropriate preventive controls. Corrective controls are designed to correct undesirable circumstances and reduce unacceptable risk exposures. Such controls provide a method whereby the risk is treated so that it becomes less likely to occur and/or the impact is much reduced. Corrective controls are designed to correct the situation, so machinery guards are corrective controls.

Examples of preventive controls include the separation of duty, whereby no person has authority to act without the consent of another when paying an invoice. Also, expenditure systems should prevent the same person from ordering goods and then authorizing the payment for those goods. In health and safety terms, preventive controls include the elimination or removal of the risk and substitution with something less risky. For example, a risky chemical used in a cleaning operation may be substituted with a less harmful one.

The advantage of preventive controls is that they eliminate the risk, so that no further consideration of it is required. In reality, this may not be a cost-effective option and may not be possible for operational reasons. The disadvantages of preventive controls are that beneficial activities that deliver rewards will be eliminated and either outsourced or replaced with something less effective and efficient.

Corrective controls are designed to limit the scope for loss and reduce any undesirable outcomes that have been realized. They may also be designed to achieve recovery against loss or damage. Examples of corrective controls can be found in the management of health and safety at work. Engineering containment by way of barriers or guards is a very well-established type of corrective control. In relation to fraud exposures, use of passwords or other access controls can be considered to be corrective controls. Staff rotation and regular change of supervisors also fit into this category of controls.

The advantage of many corrective controls is that they can be simple and cost-effective. Also, they do not require that existing practices and procedures are eliminated or replaced with alternative methods of work; the controls can be implemented within the framework of existing activities. The disadvantage of some corrective controls is that the marginal benefits that are achieved may be difficult to quantify or confirm as cost-effective.

Directive and detective controls

Directive controls are designed to ensure that a particular outcome is achieved. They are based on giving directions to people, or third-party organizations, on how to ensure that losses do not occur. They are important, but depend on people following established procedures. An example of directive controls is the requirement to wear personal protective equipment when undertaking potentially dangerous activities. Staff will need to be trained in the correct use of the equipment and a level of supervision will be required to ensure that it is used correctly.

The advantage of directive controls is that the risk control requirements can be explained during normal training and instruction sessions provided for staff. However, directive controls, especially in relation to health and safety risks, represent a low level of control that may require constant supervision.

Detective controls are designed to identify occasions of undesirable outcomes having been realized. Their effect is, by definition, ‘after the event’ so they are only appropriate when the organization is willing to tolerate the loss or damage that has occurred. Examples of detective controls include checks on stock or assets to ensure that they have not been removed without authorization. Bank reconciliation exercises can detect unauthorized transactions. Also, post-implementation reviews can detect the lessons learnt from completed projects. Detective controls are closely related to review and monitoring exercises undertaken as part of the risk governance activities in the organization.

The advantage of detective controls is that they are often simple to administer. In any case, they are essential in many circumstances where the organization will require early warning that other risk control measures have broken down. The disadvantage of the detective controls is that the risk has already materialized and is being detected after the event. However, it could be argued that the existence of the detective controls will deter certain individuals from attempting to defeat other risk controls.

Applying all four types of control to road safety

A road haulage company has decided to investigate the structure of preventive, corrective, directive and detective controls and what additional controls should be introduced to reduce the number of road accidents. The following controls have been identified:

1. Preventive controls include review of vehicle routing and realistic estimates of delivery times, so that drivers do not need to drive dangerously to arrive on time.
2. Corrective controls include enhanced maintenance procedures and improved arrangements for drivers to report vehicle defects.
3. Directive controls will be based on defensive driver training and the provision of an easy to understand vehicle driver handbook with practical advice.
4. Detective controls, by way of tachographs in the vehicles, are already used and it has been decided to also introduce regular checks of drivers’ licences for penalty points.

These are just examples of some of the controls that the company has introduced. Other controls include routine inspections of vehicles to discover and report damage and review of fuel consumption to identify drivers with an aggressive driving style. The company has introduced a number of measurable loss control programmes to reduce the overall cost of running a fleet of vehicles.

Insurance as a control

Certain types of insurance contracts require the insurance company to pay for losses suffered directly by the insured. This is first-party insurance and includes property damage insurance. Other types of insurance require the insurance company to pay compensation to other parties if they have been injured or suffer loss because of the activities of the insured. This is third-party insurance and includes motor third-party and public/general liability.

The disadvantages of insurance include the delays often experienced in obtaining settlement of a claim and the difficulties that can arise in quantifying the financial costs associated with the loss. There may be disputes over the extent of the cover that has been purchased and the exact terms and conditions of the insurance contract. Also, the insured may have difficulty in deciding the limit of indemnity that is appropriate for liability exposures. This may result in under-insurance and the subsequent failure to have claims paid in full.

Insurance is a risk transfer or risk sharing response. It represents an after the event cost containment response to a risk. Insurance is most important for low probability high impact risks, such as destruction of assets or the payment of liability costs in circumstances where liability insurance is legally required and/or catastrophic losses are possible. As well as repairing assets, insurance is available for the cost of implementing disaster recovery and business continuity plans.

The most common reason for organizations to buy insurance is that it will protect the balance sheet and/or profit and loss account. Organizations also buy insurance when they are legally or contractually obliged to do so. In addition, there is increasing use of insurance to pro- vide funding for employee benefits and/or the protection of employee assets. The latter is often achieved by the purchase of directors and officers liability insurance.

There is a wide range of different types of insurance available and the specific activities and features of the organization will help deter- mine the scope of insurance that needs to be purchased. Sometimes, there is a shortage of insurance capacity and although the organization has decided that it wishes to purchase that type of insurance, it may not be available at an affordable cost.

Whatever type of insurance is being purchased, the organization will need to make decisions about how much insurance to buy and the most suitable company to use. The organization will need to consider the six aspects, frequently referred to as the six Cs of buying insurance:

1. Cost – the cost of insurance is the premium the organization has to pay plus the level of self-insurance (including the excess or deductible) that is imposed by the policy. This means that if a claim occurs, the organization will have to pay the first part of the claim before receiving any money from the insurance company.
2. Coverage – insurance policies usually have limitations, warranties and exclusions. These will state that claims will be refused in certain circumstances. These coverage issues need to be explored in detail by the organization buying the insurance to ensure that adequate coverage is available. The only reason for buying insurance is that claims will be paid when one of the identified events occurs.
3. Capacity – for very large organizations with considerable assets, one insurance company on its own may not be willing to offer coverage up to the full value of those assets. When buying insurance, the organization will need to think about the capacity the insurance company is willing to offer in relation to the value of the assets/ exposure that needs to be insured.
4. Capabilities – many insurance companies offer services in addition to insurance. These may include loss control services and assistance with business continuity planning. The capabilities of the insurance company in these areas may be an important factor in deciding which insurance company to choose.
5. Claims – the handling of insurance claims can be a detailed and forensic exercise. In risk management terms, depending fully on insurance to make good all losses is not sufficient. Every organization should look to its business continuity plans to ensure that arrangements are in place to guarantee minimum disruption should an adverse event occur.
6. Compliance – there is increasing concern about compliance issues in relation to insurance policies. Most countries have insurance premium taxes that must be paid to the appropriate national authority. Compliance issues also extend to the requirement to buy certain insurances in the local insurance market, issue policies in the local language and/or follow certain procedures in the event of a claim.

An example of insurance strategy

As with all risk responses, an organization should decide the appropriate cost-effective approach. The following is from the website of Royal Dutch Shell plc:

Shell mainly self-insures its risk exposures. Shell insurance subsidiaries provide insurance coverage to Shell entities, up to $1.15 billion per event generally limited to Shell’s percentage interest in the relevant entity. The type and extent of the coverage provided is equal to that which is otherwise commercially available in the third-party insurance market. While from time to time the insurance subsidiaries may seek reinsurance for some of their risk exposures, such reinsurance would not provide any material coverage in the event of an incident such as BP Deepwater Horizon. Similarly, in the event of a material environmental incident, there would be no material proceeds available from third-party insurance companies to meet Shell’s obligations.

The performance management cycle

Performance management is a natural process of management: it is not an HRM technique or tool. As a natural process of management the performance management cycle, as modelled in Figure 25.1, corresponds with Deming’s (1986) plan-do-check-act model.

The processes of performance planning, managing performance, performance reviews, performance assessment recording the agreement and review, and the use of web-enabled technology involved during the cycle are described below.

Performance planning

Performance planning is based on performance agreements. Expectations are defined generally in role profiles that specify key result areas; the knowledge, skills and abilities (KSAs) required and the behavioural competencies needed to perform well. What has to be accomplished in key result areas can be defined in the form of objectives or targets. An important aspect of performance planning is the process of aligning individual goals with the strategic goals of the organization.

The acronym ‘SMART’ is often used to define a good objective. Traditionally, S stands for specific (sometimes ‘stretching’), M for measurable, A for agreed, R for realistic and T for time-related. But as Chamberlin (2011: 26) argued, ‘the real aim of setting objectives is for people to know exactly what it is they have to do, when they’ve done it, that they are able to do it, why they have to do it (ie who for) and that it is something they should be doing, and how they are progressing along the way’. Following Blanchard (1989) he suggested that the last three letters of the mnemonic should be amended to read A for attainable, R for relevant and T for trackable. He attached particular importance first to ‘relevant’, meaning that the objective is to do with the business and its customers. Second, he emphasized ‘trackable’ because the important thing to do with objectives is to monitor progress over time, ie track it (he rejected ‘time-related’ because it did not convey this essential feature and was in any case covered already by ‘specific’).

Performance agreements emerge from the analysis of role requirements and the performance review. An assessment of past performance leads to an analysis of future requirements. The two processes can take place at the same meeting.

Agreement is reached at this stage on how performance will be measured and the evidence that will be used to establish levels of competency. It is important that these measures and evidence requirements should be identified and fully agreed now because they will be used by individuals as well as managers to demonstrate and monitor achievements. The manager and the individual also agree on what the latter needs to do to achieve objectives, raise standards and improve performance.

The agreement may incorporate a personal development plan that provides a learning action programme, which individuals are expected to follow with the support of their managers and the organization. It may include formal training but, more importantly, it will incorporate a wider set of learning and development activities such as self-managed learning, coaching, mentoring, project work and e-learning. If multisource assessment (360-degree feedback) is practised in the organization this will be used to discuss development needs.

Managing performance throughout the year

Perhaps one of the most important features of performance management is that it is a continuous process that reflects normal good management practices of setting direction, monitoring and measuring performance and taking action accordingly. Performance management should not be imposed on managers as something ‘special’ they have to do. It should instead be treated as a natural function that all good managers carry out.

This approach contrasts with that used in conventional performance appraisal systems, which were usually built around an annual event – the formal review – which tended to dwell on the past. This was carried out at the behest of the personnel department, often perfunctorily, and then forgotten. Managers proceeded to manage without any further reference to the outcome of the review, and the appraisal form was buried in the personnel records system. However, formal reviews that include assessments of performance, as described below, are essential parts of the performance management cycle.

The performance review

A performance review provides a focal point for the consideration of key performance and development issues. The performance review meeting is the means through which the five primary performance management elements of agreement, measurement, feedback, positive reinforcement and dialogue can be put to good use. It leads to the completion of the performance management cycle by informing performance agreements. It involves some form of assessment, as considered in the next section of this chapter.

The review should be rooted in the reality of the individual’s performance. It is concrete, not abstract, and it allows managers and individuals to take a positive look together at how performance can become better in the future and how any problems in meeting performance standards and achieving objectives can be resolved. Individuals should be encouraged to assess their own performance and become active agents for change in improving their results. Managers should be encouraged to adopt their proper enabling role: coaching and providing support and guidance.

There should be no surprises in a formal review if performance issues have been dealt with as they should have been – as they arise during the year. Traditional performance appraisals were often no more than an analysis of where those involved are now, and where they have come from. This static and historical approach is not what performance management is about. The true role of performance management is to look forward to what needs to be done by people to achieve the purpose of the job; to meet new challenges; to make even better use of their knowledge, skills and abilities; to develop their capabilities by establishing a self-managed learning agenda; and to reach agreement on any areas where performance needs to be improved and how that improvement should take place. This process also helps managers to improve their ability to lead, guide and develop the individuals and teams for whom they are responsible.

There are 12 golden rules for conducting performance review meetings:

1. Be prepared. Managers should prepare by referring to a list of agreed objectives and their notes on performance throughout the year. They should form views about the reasons for success or failure and decide where to give praise, which performance problems should be mentioned and what steps might be undertaken to overcome them. Thought should also be given to any changes that have taken place or are contemplated in the individual’s role, and to work and personal objectives for the next period. Individuals should also prepare in order to identify achievements and problems, and to be ready to assess their own performance at the meeting. They should also note any points they wish to raise about their work and prospects.
2. Work to a clear structure. The meeting should be planned to cover all the points identified during preparation. Sufficient time should be allowed for a full discussion – hurried meetings will be ineffective. An hour or two is usually necessary to get maximum value from the review.
3. Create the right atmosphere. A successful meeting depends on creating an informal environment in which a full, frank but friendly exchange of views can take place. It is best to start with a fairly general discussion before getting into any detail.
4. Provide good feedback. Individuals need to know how they are getting on. Feedback should be based on factual evidence. It refers to results, events, critical incidents and significant behaviours that have affected performance in specific ways. The feedback should be presented in a manner that enables individuals to recognize and accept its factual nature – it should be a description of what has happened, not a judgement. Positive feedback should be given on the things that the individual did well in addition to areas for improvement. People are more likely to work at improving their performance and developing their skills if they feel empowered by the process.
5. Use time productively. The reviewer should test understanding, obtain information, and seek proposals and support. Time should be allowed for the individual to express his or her views fully and to respond to any comments made by the manager. The meeting should take the form of a dialogue between two interested and involved parties, both of whom are seeking a positive conclusion.
6. Use praise. If possible, managers should begin with praise for some specific achievement, but this should be sincere and deserved. Praise helps people to relax – everyone needs encouragement and appreciation.
7. Let individuals do most of the talking. This enables them to get things off their chest and helps them to feel that they are getting a fair hearing. Use open-ended questions (ie questions that invite the individual to think about what to reply rather than indicating the expected answer). This is to encourage people to expand.
8. Invite self-assessment. This is to see how things look from the individual’s point of view and to provide a basis for discussion – many people underestimate themselves.
9. Discuss performance not personality. Discussions on performance should be based on factual evidence, not opinion. Always refer to actual events or behaviour and to results compared with agreed performance measures. Individuals should be given plenty of scope to explain why something did or did not happen.
10. Encourage analysis of performance. Don’t just hand out praise or blame. Analyse jointly and objectively why things went well or badly and what can be done to maintain a high standard or to avoid problems in the future.
11. Don’t deliver unexpected criticisms. The discussion should only be concerned with events or behaviours that have been noted at the time they took place. Feedback on performance should be immediate; it should not wait until the end of the year. The purpose of the formal review is to reflect briefly on experiences during the review period and, on this basis, to look ahead.
12. Agree measurable objectives and a plan of action. The aim should be to end the review meeting on a positive note.

These golden rules may sound straightforward and obvious enough but they will only function properly in a culture that supports this type of approach. This emphasizes the importance of getting and keeping top management support and the need to take special care in developing and introducing the system and in training managers and their staff.

Performance assessment

Most performance management schemes include an assessment, which is usually carried out during or after a performance review meeting. This may be carried out by overall assessment, rating or visual assessment, as described below.

Overall assessment

An overall assessment is based on a general analysis of performance under the headings of the performance agreement. The aim is to reach agreement about future action rather than to produce a summarized and potentially superficial judgement. Managers are expected to reach an understanding with each member of their team as a result of the analysis, which will ensure that the latter will appreciate how well or not so well they are doing. The analysis should also identify the high-flyers and those who are failing to meet acceptable standards. An overall assessment is recorded in a narrative consisting of a written summary of views about the level of performance achieved. This at least ensures that managers have to collect their thoughts together and put them down on paper. But different people will consider different aspects of performance and there will be no consistency in the criteria used for assessment, so it is necessary to have a framework for the analysis. This could be provided on a ‘what’ and ‘how’ basis. The ‘what’ is the achievement of previously agreed objectives related to the headings on a role profile. The ‘how’ is behaviour in relating to competency framework headings. The results for each ‘what’ and ‘how’ heading could be recorded following a joint analysis during a review meeting.

One problem with this form of assessment, indeed any form of assessment, is that we can recognize people at either extreme (top performers and inadequate performers) but cannot accurately distinguish performance differences in the bulk of people lying between those extremes. What managers can do is to tell an individual that he or she has done exceptionally well and that they will therefore be included in the talent management programme, or managers can inform another individual that he or she has not done very well and that they must discuss what needs to be done about it. The others can be told that they are doing a perfectly good job and discussions can take place on how they can build on their strengths or on any learning activity (preferably self-directed) that might help them to do even better. Another problem with overall assessments is that they can be bland, superficial and overgeneralized. This is why many schemes use rating.

Rating

Rating summarizes on a scale the views of the rater on the level of performance achieved. A rating scale is supposed to assist in making judgements and it enables those judgements to be categorized to inform performance- or contribution-pay decisions, or simply to produce an instant summary for the record of how well or not so well someone is doing.

Rating scales can be defined alphabetically (a, b, c, etc), or numerically (1, 2, 3, etc). Initials (ex for excellent, etc) are sometimes used in an attempt to disguise the hierarchical nature of the scale. The alphabetical or numerical points scale may be described adjectivally, for example, a = excellent, b = good, c = satisfactory and d = unsatisfactory. Alternatively, scale levels may be described verbally, as in the following example:

• Exceptional performance: exceeds expectations and consistently makes an outstanding contribution that significantly extends the impact and influence of the role.
• Well-balanced performance: meets objectives and requirements of the role, consistently performs in a thoroughly proficient manner.
• Barely effective performance: does not meet all objectives or role requirements of the role; significant performance improvements are needed.
• Unacceptable performance: fails to meet most objectives or requirements of the role; shows a lack of commitment to performance improvement or a lack of ability, which has been discussed prior to the performance review.

The e-reward 2005 survey of performance management found that overall ratings were used by 70 per cent of respondents. The most popular number of levels was five (43 per cent of respondents). However, some organizations settled for three levels. There is no evidence that any single approach is clearly superior to another, although the greater the number of levels the more is being asked of managers in the shape of discriminatory judgement. It is, however, preferable for level definitions to be positive rather than negative and for them to provide as much guidance as possible on the choice of ratings. It is equally important to ensure that level definitions are compatible with the culture of the organization and that close attention is given to ensuring that managers use them as consistently as possible.

The main problem with ratings is that they are largely subjective and it is difficult to achieve consistency between the ratings given by different managers. Because the notion of ‘performance’ is often unclear, subjectivity can increase. Even if objectivity is achieved, to sum up the total performance of a person with a single rating is a gross oversimplification of what may be a complex set of factors influencing that performance. To do this after a detailed discussion of strengths and weaknesses suggests that the rating will be a superficial and arbitrary judgement. To label people as ‘average’ or ‘below average’, or whatever equivalent terms are used, is both demeaning and demotivating.

The whole performance review session may be dominated by the fact that it will end with a rating, thus severely limiting the forward-looking and developmental focus of the meeting, which is all important. This is particularly the case if the rating governs performance- or contribution-pay increases.

Another problem is that managers may inflate ratings to avoid confrontation with the individuals concerned. Some organizations (8 per cent of the respondents to the performance management survey conducted by Armstrong and Baron (2004)) attempted to counter this by using forced distribution, which requires conforming to a laid down distribution of ratings between different levels, for example: A = 5 per cent, B = 15 per cent, C = 60 per cent, D = 15 per cent and E = 5 per cent. This achieves consistency of a sort but managers and staff rightly resent being forced into this sort of straitjacket.

An alternative to forced distribution is forced ranking. It is most common in the United States where the outcome is sometimes known as a ‘vitality curve’. Managers are required to place their staff in order from best to worst. The problem with forced ranking, as with forced distribution, is that the notion of performance may not be defined and is therefore not measurable. In the case of ranking it is therefore unclear what the resulting order of employees truly represents.

Some organizations, mainly in the United States, have gone as far as adopting the practice of annually terminating the employment of 5 to 10 per cent of the consistently lowest performers. This is referred to colloquially as ‘rank and hank’. It is claimed that this practice ‘raises the bar’, ie it is said that it improves the overall level of performance in the business. There is no evidence that this is the case.

Visual assessment

Visual assessment is an alternative to rating. This takes the form of an agreement between the manager and the individual on where the latter should be placed on a matrix or grid. The vertical axis of the grid in this example assesses the behavioural style adopted by the individual in carrying out the role, ie inputs. The elements of behaviour to be assessed would be defined in a competency framework and this would be amplified in schedules of what would be regarded as acceptable or unacceptable behaviour for each area of competency. The horizontal axis measures the level of business performance, ie outputs or what the individual delivers. The assessment can place someone anywhere in one of the four quadrants according to behavioural style and delivery. Examples of possible actions are provided. A picture is thus provided of the individual’s overall contribution, which is presented visually and as such provides a better basis for analysis and discussion than a mechanistic rating.

Recording the performance agreement and review

The performance agreement and outcomes of a review can be recorded on a performance management form. This should serve as a working document. It should be regularly used by managers and individuals as a reference document on objectives and plans when reviewing progress. It is a means of recording agreements on performance achievements and actions to be taken to improve performance or develop competence and skills. It should be dog-eared from much use – it should not be condemned to moulder away in a file.

Web-enabled performance management

Web-enabled or online performance management makes it easier for managers and employees to record role profiles and performance agreements, monitor progress against the plans, access performance documents, and gather multisource (360-degree appraisal) comments. All this data can be used to assist in performance reviews and record further agreements emerging from the reviews. The aim is to reduce paperwork and simplify the process.

Turning People on to Learning

What's in This Chapter?

• The fundamentals of adult learning
• Strategies for supporting the transfer of training
• Strategies for designing effective training programs
• Keys to effective facilitation

Training doesn't ensure that learning occurs, but it is a powerful tool for developing the critical competencies needed to meet the challenges facing any organization. This chapter offers some key insights into how people learn best, which will enable you to design training programs that actively engage people in their own learning and growth. This involvement, in turn, will enable them to successfully do their work, make decisions, solve problems, and contribute to creating great results for the customer.

The Fundamentals of Adult Learning

Although learning has always been a part of the human experience—often through necessity as much as desire or aspiration—some broad principles for guiding and facilitating adult learning in particular have emerged over the past 40 years. Drawn from the work of Knowles, Brookfield, and others, these core principles, along with implications and suggestions for the learning and teaching environment, are outlined in table 4-1.

Table 4-1: Key Principles of Adult Learning and Their Implications for Teaching and Training Design

ADULT LEARNING PRINCIPLE	IMPLICATION FOR TEACHING AND TRAINING DESIGN
Adults bring life experience and knowledge to the learning environment. This experience and knowledge includes work-related, family, and community events and circumstances.	Provide opportunities for learners to reflect on and share their existing knowledge and experience. Create learning activities that involve the use of past experience or knowledge.
Adults learn best when they can relate new knowledge and information with previously learned knowledge, information, and experiences.	Ask learners to identify the similarities and differences between what they are learning and what they already know.
Adults tend to prefer self-directed, autonomous learning—but this is often not an expectation of educational institutions and society.	Design training around participants' needs and goals. Ask participants what they want to learn. Learners learn best when they establish a specific learning objective or goal for themselves. Provide learner action planning tools and templates to help develop and focus their self-directed efforts and facilitate learning. Provide opportunities for learners to direct their own learning through guided inquiry and self-facilitated small-group discussions.
Adults have self-pride and desire respect. They need their experience, beliefs, knowledge, questions, and ideas acknowledged as important.	Because learning involves risk and the possibility of failure, design training to minimize each learner's risk and embarrassment. Provide opportunities for learners to share ideas, questions, opinions, experiences, concerns, etc., and to create an environment that honors and respects everything that is appropriately shared. Create flexible training programs that honor participants by accommodating their contributions and questions as much as possible. Make it safe for learners to express their confusion, anxieties, doubts, and fears. Provide opportunities for "small wins" and little victories in the learning process—to build competencies incrementally.
Adults want practical, goal-oriented, and problem-centered learning that can immediately help them deal with life's challenges.	Ask learners to identify what they would like to learn about a topic. Establish clear learning objectives that make the connection between participant's needs and the learning content. Share examples and stories that relate the learning content to participant's current challenges. Ask learners to share their own examples that make this linkage. Engage learners in identifying the challenges they face and the value of learning in addressing these challenges. Follow theories with practical examples and applications to demonstrate the relevance of the learning.
Adults desire feedback on the progress they are making at learning something new.	Provide opportunities for learners to get immediate feedback to their own learning through case examples, role-playing, quizzes, and responses to trainer questions. Encourage learners to self-evaluate and assess their own learning and performance. Praise any level of learning improvement and encourage continued learning.
Adults have preferences for the way in which they learn. Some prefer learning by doing (kinesthetic), others prefer learning by observing (visual), whereas still others prefer learning by listening (auditory).	Recognize that not all learners will respond to a given teaching method or technique. Use a wide variety of methods that tap into all learner preferences in training delivery. Use all three learning modes (kinesthetic, visual, and auditory) in every 20-minute teaching interval. Make trainers aware their own learning preferences and wary of favoring this approach in their own teaching. Free learners to learn in the style that best suits them by using small group work, dyadic discussions, and individual activities.
Adults learn best through collaboration and reciprocity—an environment in which people learn with others while sharing what they already know.	Provide a low-risk environment for learning while capitalizing on the different levels of knowledge and skill within a group by using small group work and dyadic discussion. Strengthen learner self-esteem through team-based learning, based on mutual trust and respect. Use small-group learning to more accurately reflect the participants' interdependent and collaborative work environment back on the job.
Adults are motivated to learn by a wide variety of factors. These are the most common: personal aspirations, externally imposed expectations, internal desire or interest, escape from a situation (boredom or fear), growth and advancement, and service to others.	Inquire into the reasons participants are interested in learning. Invite learners to identify the link between learning and the satisfaction of a personal need or a reduction in an external stress or threat. Make a connection between the learning content and each learner's long-range objectives (in work and life). Ask participants to discuss in pairs and small groups the short- and long-term benefits of learning the program's content.

Supporting the Transfer of Training

The goal of training involves more than simply teaching essential skills and knowledge to participants. It also involves ensuring that what is learned in the workshop is "transferred" to the workplace. The transfer of training should be of the utmost importance to the trainer because if a trainee learns what is desired but is unable or unwilling to apply this new learning back on the job, the trainer's time and the organization's resources have been squandered. For this reason, the "transfer problem" has been the focus of considerable debate and research.

In their book Transfer of Training (1992), Mary Broad and John Newstrom offer a powerful model to better understand and influence the transfer of training. They designed and tested a transfer of training matrix that combines the three key roles involved in the learning experience (trainee, trainer, and manager) and the three time phases associated with training delivery (before, during, and after). The results of their research offer some important insights into the best roles and times to support the maximum transfer of learning to the workplace.

As shown in table 4-2, Broad and Newstrom's research revealed that the most powerful influence on the effective transfer of training from the workshop to the workplace is the manager's support for the learning prior to the training event. The second most powerful role and time period is the trainer taking steps to prepare the trainee prior to the training event. The third most powerful impact on effective transfer was found to be the manager's support and reinforcement of learning following the skill training.

Table 4-2: Perceptions of Most Powerful Role-Time Combinations for Using Transfer of Training Strategies

	before	during	after
Manager	1	8	3
Trainer	2	4	9
Learner	7	5	6
Key: 1 = high to 9 = low effectiveness / potency

Broad and Newstrom's research, which was based on interviews with expert trainers, indicates that ensuring both the manager and the trainer are doing the right things at the right time will provide the maximum benefit. With this in mind, here are a few suggested actions for managers, supervisors, and trainers that will help facilitate the transfer of training before, during, and after the training session.

Before the Training

Managers and supervisors can support the transfer of training before the training session by these actions:

• communicating learning outcome expectations to the trainer to ensure that the training session develops the right knowledge, skills, and abilities
• discussing the importance and benefits of the skills that will be learned in the training session to the trainee, to his or her own work products, and to the broader performance of the work area or team
• involving the trainee in developing the learning goals and objectives for the session to help him or her understand the benefits
• supporting the employee's participation by providing assistance or backup for covering workload
• ensuring that this is the right person for the training at the right time (there's no point sending someone who doesn't need the training or sending someone who does but who may be working under distracting pressures)
• attending the training program in advance of the trainee, or attending with the trainee
• developing a learning contract with the employee to reinforce learning goals and the value of skill acquisition
• sending the trainee to the session with others, to facilitate and reinforce team learning.

Trainers can facilitate the transfer of training in advance of the training session by:

• ensuring that the training objectives match the skill requirements of the organization, department, and individual participants
• piloting the training session with subject matter experts to ensure that the right knowledge, skills, and abilities are being developed in a meaningful way
• sending information to trainees highlighting the program's goals and the session's relevance to their work and the challenges they face
• requesting that training participants complete pre-session work, conduct research, or complete readings.

During the Training Session

Managers and supervisors can support the transfer of training during the session by these actions:

• ensuring that the trainee's workload pressures don't distract the trainee from active engagement in the session
• arranging for back-up support to the trainee to cover phone calls, e-mails, and other requests that, if directed to the trainee, might distract him or her from the session.

During the training session, the trainer's responsibilities for facilitating the transfer of training include following the principles of adult learning and ensuring that the seminar content and instruction relate directly to the participant's workplace. Here are some specific activities that facilitate transfer during training:

• asking participants to develop specific learning objectives for the skill or knowledge area
• providing cases, scenarios, and role-plays based on participant examples and situations
• communicating and selling the on-the-job benefits of learning
• providing "job aids" (for example, checklists, tools, models, reminder cards, and so forth) that trainees can use back on the job and that aid learning and application
• facilitating action planning to guide training participants in developing specific "next step" application goals following the training session.

Following the Training

Managers and supervisors can support the transfer of training following the delivery of training by

• meeting with the trainee to discuss what he or she learned and how he or she will use and apply the learning to their work or behaviors
• providing opportunities for the trainee to practice the new skills and behaviors
• giving positive reinforcement to the trainee when he or she observes the person practicing the learned behaviors or skills
• establishing a formal "debriefing" following the training to provide feedback and additional learning to help sustain the new practices
• encouraging the trainee to summarize key insights, methods, tools, and approaches learned during the session at a future work unit meeting.

The trainer can facilitate and support the transfer of training following the training session by

• following up with the trainee to check for understanding, questions, and progress in using the new practices or skills
• distributing tip sheets, check sheets, and other job aids to trainees as a follow-along reminder and reinforcement of key learning outcomes, tools, behaviors, and methods
• conducting refresher mini-sessions or discussions at specific intervals to facilitate, integrate, and sustain learning and application and provide opportunities for additional feedback and reinforcement
• being available to answer follow-up questions, provide additional feedback, and give further direction to trainees.

Simply honoring the principles of adult learning and taking the right actions to facilitate the transfer of training will be enormously helpful in the design of the training program. Before we move on to the performance management and review training modules, we want to offer some additional tips that will further help you build and deliver a dynamic and effective training program.

Designing Effective Training Programs

Training program design is more art than science, in that a perfectly designed training program with all of the right content will fall flat if it doesn't make room for both the participants' learning preferences and the teaching style of the trainer. The program should reflect the suggested content and modules in this book as well as your own personal style and approach to learning and teaching. Within this approach, here are some specific suggestions for effective training program design:

• Ensure that you do a thoughtful needs analysis of the organization and prospective learners before designing and delivering the training. The suggested strategies for conducting this analysis in chapter 3 will start you off in the right direction.
• Stay flexible in your design and delivery. If you need to change gears in response to what you're seeing and hearing, don't be afraid to do so. This means, however, that you must go into the session with a deep understanding of the content, which will enable you to pivot when necessary. Be prepared.
• Actively involve participants in their own learning. Use a variety of interactive training methods: small groups, pairs, role-playing, action planning, pop quizzes, practice time, brainstorming, games, and guided inquiry are some common methods. Be adventurous and take some risks to help make learning happen.
• Break up the allotted training time into segments, focusing on a specific learning outcome in each.
• Design each learning segment with a clear beginning, middle, and end. Ensure that the training methods and activities you use help achieve the specific learning objective of each segment.
• At the beginning of the session, give trainees the "big picture" of the topic and the issues you'll be exploring with them during the program.
• Solicit participant questions and integrate a process of addressing these questions into your training delivery.
• Provide sufficient time for learning integration. Pace your learning objectives and supporting activities to allow time for trainees to reflect upon their learning insights and integrate them into their future practice.
• Provide supplemental worksheets to facilitate the trainees' recording of key learning insights ("aha! moments") gleaned from session discussions and applications.
• Build trainee action planning into your training program. Developing a specific action plan of what the trainee will do back on the job helps ensure that what is learned is applied to daily tasks and responsibilities after the training session.
• Strive to integrate all three ways in which people learn (auditory, visual, and kinesthetic) when teaching each of your learning outcomes. For example, when delivering a specific learning objective to trainees, tell a revelatory story (auditory), give people a checklist or graphic that displays key learning points (visual), and engage the learner in some "doing" activity—such as role-playing or action planning (kinesthetic). By using each of the three learning modes to teach every learning objective, the trainer increases the likelihood that each trainee, regardless of his or her preferred learning style, will remember the learning objective.
• End your training session with a recap of the key learning points and a final restatement of the value of translating the insights gained into daily practice.

Facilitating Versus Teaching

Facilitating learning involves more than just teaching or instructing participants. Facilitation includes creating and managing an environment that makes learning easy and invites the trainee into a learning opportunity by giving him or her the choice to learn and the decision on how to learn. The internal commitment to learning that results from the trainee choosing to learn increases his or her learning retention and helps sustain the application of learning back on the job.

Here are some suggestions for facilitating participant learning:

• Warmly greet people as they arrive at the training room. Find out where they work, what they hope to get out of the session, and some of the challenges they face.
• Write key questions, quotes, and provocative statements related to the topic on flipchart pages and post them around the room.
• Create a comfortable aural environment by playing soothing music (we recommend classical or light jazz) as people enter the training room.
• Establish the expectation of participant involvement early in the session. For example, you might begin a session by asking the large group a provocative question about the topic, to immediately engage trainees in the content and encourage active participation.
• Have participants formally interact with each other within the first 10 to 15 minutes. This "ice-breaker" can be an exercise in goal setting, sharing key questions, or simply getting to know one another. The point of the ice-breaker is to create a safe and welcoming environment and to set the expectation that this will be an interactive and engaging seminar.
• Find a way to value every contribution, no matter how far off the subject or difficult to comprehend the trainee's comments or questions might be. People are taking a risk when they volunteer ideas or offer questions. Honor and respect what people offer by establishing a link between what they have said and the key point you are making.
• Establish ground rules for discussions and information sharing that help create confidentiality and safety. Encourage people to state their honest perceptions, experiences, and thoughts without fear that what they share during the session will be used against them.
• Establish the expectation early in the session that participants are responsible for their own learning. Indicate that you will provide a framework for learning and offer them useful information, tools, and tips, but let them know that learning is primarily their responsibility.
• Stay connected to the group. Watch for signs of involvement or boredom and respond accordingly by sustaining the energy or dealing with the boredom by switching gears or changing direction.
• Use breaks to interact with participants. Find out if they are engaged, learning, frustrated, energized, or anxious. Talk to a variety of people to gather multiple perspectives.
• Use people's names when calling on them or when responding to their questions or comments.
• Refer back to specific comments, ideas, questions, or suggestions offered by participants earlier in the session (for example, "Earlier this morning, Steve gave an example of where there wasn't sufficient focus on performance accountability and performance results didn't seem to matter in his area. How might we use the tools we've just learned to help Steve deal with this issue?").
• When asked a content question by a participant, use the question as a teaching opportunity. Turn the question back to the group to answer (formulating your own answer while the group responds).
• Vary the pace and methods of your instruction. Use different techniques throughout the session to engage participants in new ways.

Providing feedback

Feedback to people on how they are doing is an important performance management activity. It is provided by managers informally during the year or formally at a performance review meeting. It can be given by subordinates or internal customers as part of a 360-degree feedback system (see Chapter 7). Or it can be something that individuals do for themselves. This chapter deals with feedback under the following headings:

• Feedback defined
• The nature of feedback
• Use of feedback
• How effective is feedback?
• What makes feedback effective?
• Guidelines on providing feedback
• Handling difficult conversations

Feedback defined

Feedback is the provision of information to people on how they have performed in terms of results, events, critical incidents and significant behaviours. Feedback can be positive when it tells people they have done well, constructive when it provides advice on how to do better, and negative when it just tells people that they have done badly. Feedback reinforces effective behaviour and indicates where and how behaviour needs to change.

In systems engineering, feedback transmits information on performance from one part of a system to an earlier part of the system in order to generate corrective action or to initiate new action. In this respect performance management has the characteristics of a system in that it provides for information to be presented (feedback) to people on their performance, which helps them to understand how well they have been doing and how effective their behaviour has been. The aim is for feedback to promote this understanding so that appropriate action can be taken. This can be positive action taken to make the best use of the opportunities the feedback has revealed, or corrective action where the feedback has revealed that something has gone wrong.

Systems engineers design self-regulating systems that generate their own feedback and respond to this information of their own volition. The same principle can be applied in performance management – individuals can be encouraged to understand the performance measures that are available for them to use in order to provide their own feedback and to develop their own plans for performance development and improvement.

Such self-generated feedback is a highly desirable feature of a full performance management process but there will always be a need for managers and colleagues to provide feedback based on their own observations and understanding.

The nature of feedback

Feedback in performance management is positive in the sense that its aim is to point the way to further development and improvement. Feedback is helpful when it recognizes success and constructive when it identifies areas for improvement that can lead to effective action. It is negative and unhelpful when perceived failings are dwelt on as matters for blame. A positive approach is to treat mistakes or errors of judgement as opportunities for learning so that they are less likely to be repeated in the future.

Evidence-based performance management depends on feedback that relies on facts not opinions. It refers to results, events, critical incidents and significant behaviours that have affected performance in specific ways. It compares what has actually happened with what was supposed to have happened. It refers to agreed goals, success criteria and performance measures, and uses the latter to establish outcomes. The feedback should be presented in a way that enables individuals to recognize and accept its factual nature. Of course there will often be room for some interpretation of the facts but such interpretations should start from the actual situation as reported in the feedback not from the subjective views expressed by the provider of the feedback.

Use of feedback

Providing regular feedback as an important part of the continuous process of performance management was well described by Lee (2005) as follows:

The use of feedback in reviewing and developing performance (Lee, 2005)

Performance conversations should include a two-way exchange to ensure that the employee fully understands what is good, what is bad, and why the good performance is good and the bad is bad. With accurate descriptions of the nuances of performance the employee can better understand how his or her past actions or activities affected performance outcomes and how future efforts are likely to contribute to future performance. Accurate descriptions or diagnoses of performance are crucial, for understanding and improvement are possible only through timely feedback.

The longer the gap between performance events and performance feedback, the greater the challenge of remembering with clarity the character and quality of the performance events… two semi-annual or one annual performance conversation cannot manage performance alone. They might be effective in documenting some performance parameters but they are not likely to be effective in managing, regulating and improving performance. Good supervision with ample feedback is good performance management.

Lee also pointed out that: ‘Although many people confuse the two, feedback and appraisal are fundamentally different things. Feedback is information-based, whereas the basis of appraisal is judgement or evaluation. Furthermore, feedback is an ongoing activity, and appraisal is periodic and event-based (annual).’

As London et al (2004) commented, feedback plays a key role, along with goals setting, in the self-regulation of performance. Feedback focuses attention on performance goals that are important to the organization, helps discover errors, maintains goal direction, influences new goals, provides information on performance capabilities and on how much more effort-energy is needed to achieve goals, and provides positive reinforcement for goals accomplishments.

How effective is feedback?

Research on performance appraisal feedback suggests that when individuals receive negative feedback they are often discouraged rather than motivated to improve. Kluger and DeNisi (1996) cautioned that not all feedback interventions result in improvements. In their meta-analysis based largely on performance appraisal feedback research they conclude that, in over a third of the cases, feedback actually resulted in less effective performance. The analysis suggested that there may be many factors that influence how individuals react to feedback affecting who will improve following feedback and who will not.

What makes feedback effective?

DeNisi and Kluger (2000) commented that feedback interventions are more likely to be effective if they keep the employee’s attention focused on objectives at the task performance level and least likely to be effective if they are applied at a personal level.

Research by Gray (2001) identified two factors that influenced how receivers valued their feedback: (1) the extent to which the feedback was trustworthy, and (2) the extent to which it was constructive.

Guidelines on providing feedback

1. Build feedback into the job. To be effective, feedback should be built into the job or provided as soon after the activity has taken place.
2. Provide feedback on actual events. Feedback should be given on actual results or observed behaviour. It should be backed up by evidence. It should not be based on supposition about the reason for the behaviour. You should, for example, say: ‘We have received the following complaint from a customer that you have been rude, would you like to comment on this?’, rather than: ‘You tend to be aggressive.’
3. Describe, don’t judge. The feedback should be presented as a description of what has happened; it should not be accompanied by a judgement. If you start by saying: ‘I have been informed that you have been rude to one of our customers; we can’t tolerate that sort or behaviour,’ you will instantly create resistance and prejudice an opportunity to encourage improvement.
4. Refer to and define specific behaviours. Relate all your feedback to specific items of behaviour. Don’t indulge in transmitting general feelings or impressions. When commenting on someone’s work or behaviour define what you believe to be good work or effective behaviour with examples
5. Emphasize the ‘how’ not the ‘what’. Focus attention more on how the task was tackled rather than on the result.
6. Ask questions. Ask questions rather than make statements: ‘Why do you think this happened?’; ‘On reflection is there any other way in which you think you could have handled the situation?’; ‘How do you think you should tackle this sort of situation in the future?’
7. Select key issues. There is a limit to how much criticism anyone can take. If you overdo it, the shutters will go up and you will get nowhere. Select key issues and restrict yourself to them.
8. Focus. It is a waste of time to concentrate on areas that the individual can do little or nothing about. Focus on aspects of performance the individual can improve.
9. Provide positive and constructive feedback. People are more likely to work positively at improving their performance and developing their skills if they feel empowered by the process. Provide feedback on the things that the individual did well in addition to areas for improvement. Focus on what can be done to improve rather than on criticism.
10. Ensure feedback leads to action. Feedback should indicate any actions required to develop performance or skills.

Handing difficult conversations

Many mangers find it difficult to provide negative feedback – to criticize their subordinates – especially in a formal or semi-formal meeting. They worry in case the employee reacts badly and an unpleasant situation arises.

Minimizing the problem

This problem can be minimized if the steps given below are followed by managers before and during a feedback or review meeting.

1. Keep in touch with the members of their team. If they see that managers are approachable and ready to listen they are more likely to come to you with their problems. It is far better to nip the problems in the bud, wherever possible, rather than waiting for them to become more entrenched or complicated.
2. Get to know each individual in order to anticipate possible behaviour.
3. Do not wait until a formal review meeting. They should have a quiet word at the first sign something is going wrong.
4. If they have to hold a formal meeting, get the facts in advance – what happened, when and why?
5. Plan the meeting on the basis of the facts and what they know about the individual. Define what they want to achieve.
6. Set the right tone from the start of the meeting – adopt a calm, measured, deliberate but friendly approach.
7. Begin the conversation by explaining the purpose and structure of the meeting, indicating to the individual what the issues is, using their knowledge of the situation and giving specific examples.
8. Focus on the issue and not the person.
9. Ask for an explanation. Ask unloaded questions to clarify the issues and explore them together.
10. Listen to what the individual has to say – he or she may need to let off steam.
11. Keep an open mind and don’t jump to conclusions.
12. Acknowledge the individual’s position and any mitigating circumstances.
13. If new evidence emerges, adjourn the meeting if this feels appropriate.
14. Ask the employee for proposals to resolve the situation, discuss the options and if possible agree on action by the individual, the manger or jointly.
15. If agreement cannot be reached, managers may have to define the way forward, with reasons – they are in charge!

Dealing with difficult situations

With the best will in the world you may get a negative reaction from an individual – ranging from sullen silence to open hostility, even rage. To deal with this sort of difficult situation managers should adopt the approach set out below.

1. Maintain control of the meeting.
2. Put clear boundaries in place and ensure that the conversation keeps within them.
3. Remain calm at all times – never respond to anger with anger.
4. Use questioning techniques to clarify the facts.
5. Be firm and restate their position as necessary.
6. Decide what tactics are working and if they need to change their approach. Know when to expand a conversation by seeking clarification and gaining understandings and when to restrict it.
7. Decide if and when they need to adjourn for a break to allow either party to consider their position or to cool things down.
8. Stay clear or emotive language and don’t respond to manipulative behaviour.
9. Allow people to have their say and listen to them, but make it clear that rudeness or any form of unacceptable behaviour will not be tolerated. Terminate the meeting before things get out of hand.
10. If, in spite of the facts, the individual is in denial, restate the evidence, indicate what happens next (possibly another meeting after a cooling off period) and close the meeting.

Coaching

Coaching is a fundamental performance management activity that takes the opportunities presented by the work itself and uses them to develop the knowledge, skills, competencies and therefore the performance of people. Coaching opportunities arise in two ways: informally on a day-to-day basis, and after a formal performance review that identifies learning and development needs. The CIPD learning and development 2008 survey found that 44 per cent of organizations offer coaching to all employees and the most important providers of coaching were line managers.

Research by Graham, Wedman and Garvin-Kester (1994) showed that specific behaviours heve been directly correlated with net increases in sales. Research by Ellinger (2003) indicated that improvements in systems and cost savings may be directly attributed to coaching interventions by managers. Ellinger, Ellinger and Keller (2003) conducted research in a distribution centre and found that supervisory coaching behaviour was a highly significant predictor of employee job satisfaction and performance.

This chapter focuses on the line manager’s responsibility for coaching under the following headings:

• coaching defined;
• the process of coaching;
• the approach to coaching;
• techniques of coaching;
• the skills of coaching.

Coaching defined

Coaching is a personal (usually one-to-one) on-the-job approach to helping people develop their skills and levels of competence. The need for coaching may arise from formal or informal performance reviews but opportunities for coaching will emerge during normal day-to-day activities. Every time a manager delegates a new task to someone, a coaching opportunity is created to help the individual learn any new skills or techniques needed to get the job done. Every time a manager provides feedback to an individual after a task has been completed, there is an opportunity to help that individual do better next time.

Coaching was defined by Ellinger, Ellinger and Keller (2003) as a day-to-day, hands-on process of helping employees recognize opportunities to improve their performance and capabilities; a form of facilitating learning. Jarvis (2004) stated that coaching usually lasts for a short period and focuses on specific skills and goals.

As Lee (2005) explained: ‘The coaching model of performance management redefines the relationship between the supervisor and the subordinate. The two work together to help the subordinate perform at his or her very best.’ Coaching involves short-term interventions designed to remedy problems that interfere with the employee’s performance but it is also concerned with longer-term development and continuous learning.

Coaching can be distinguished from mentoring and counselling. Mentoring describes a relationship in which more experienced individual uses his or her greater knowledge and understanding of the work or workplace to support the development of a more junior or inexperienced colleague. Counselling addresses the employee’s emotional state and the causes of personal crises and problems. It is usually conducted by trained counsellors and involves short-term interventions designed to remedy problems that interfere with the employee’s job performance.

The process of coaching

As described by the CIPD (2007) coaching is essentially a non-directive form of development. Evered and Selman (1989) defined the following essential characteristics that define god coaching: developing a partnership, commitment to produce a result, responsiveness to people, practice and preparation, a sensitivity to individuals, and a willingness to go beyond who has already been achieved.

Woodruffle (2008) suggested that coaching should aim to:

• amplify an individual’s own knowledge and thought processes
• improve the individual’s self-awareness and facilitate the winning of detailed insight into how the individual may be perceived by others;
• create a supportive, helpful, yet demanding, environment in which the individual’s crucial thinking skills, ideas and behaviours are challenged and developed.

Coaching as a part of the normal process of management consists of:

• Making people aware of how well they are performing by, for example, asking them questions to establish the extent to which they have thought through what they are doing.
• Controlled delegation: ensuring that individuals not only know what is expected of them but also understand what they need to know and be able to do to complete the task satisfactorily. This gives managers an opportunity to provide guidance at the outset – guidance at a later stage may be seen as interference.
• Using whatever situations may arise as opportunities to promote learning.
• Encouraging people to look at higher-level problems and how they would tackle them.

Approach to coaching

Coaching can provide motivation, structure and effective feedback if managers have the required skills and commitment. As coaches, managers believe that people can succeed, and that as their managers they can help people to identify what they need to do to develop and grow their skills. When coaching, managers look for the best in people and try to build on their strengths, rather than dwelling on their weaknesses. The aim is to help people to help themselves. Coaching encourages self-directed learning using any resources such as e-learning that are available. It is not a matter of spoon-feeding people.

Coaching may be informal but it needs to be planned. It is not simply checking from time to time in what people are doing and then advising them on how to do it better. Nor is it occasionally telling people where they have gone wrong and throwing in a lecture for a good measure. As far as possible, coaching should take place within the framework of a general plan of the areas and direction in which individuals will benefit from further development. Coaching plans should be incorporated into the personal development plans set out in a performance agreement.

Thompson, Purdy and Summers (2008) listed five coaching stages: 1) developing a relationship with the client; 2) collecting and analysing diagnostic information; 3) processing feedback and planning actions; 4) taking action; 5) evaluating progress.

Woodruffe (2008) recommended a three-part approach to coaching:

1. Discovery. The aim of the first meeting – or meetings – is to focus on discovery. In this stage, individuals being coached find out about themselves. Personality inventories may be used to facilitate discussions concerning the individual’s self-perception. Career expectations and career development are explored. 360-degree feedback tools are used to introduce the views of others. The goal of the discovery phase is to heighten self-awareness.
2. Action Plan. Once individuals have a clear picture of their strengths, weaknesses and how they came across to others, they are encouraged to set goals and objectives to develop and challenge themselves. The goals will be set within the context of career development and will take advantage of current business issues or projects.
3. Review and recommit. At this point individuals review their performance against the goals they had set. Action plans can be updated and altered if necessary. The sessions are used to discuss and build upon successes, as well as examining how obstacles and difficulties can be overcome.

Coaching will be most effective when the coach understands that his or her role is to help people to learn and individuals are motivated to learn. Employees who are doing well should be keen to learn more in order to do even better. Employees who are aware that their present level of ability needs to be improved if they are going to perform their work satisfactorily should recognize that they will benefit from an opportunity to enhance their knowledge and skills through coaching. Individuals should be given guidance on what they should be learning and feedback on how they are doing and, because learning is an active not a passive process, they should be actively involved with their coach who should be constructive, building on strengths and experience.

Techniques of coaching

Good coaching is about encouraging people to think through issues, getting them to see things differently, enabling them to work out solutions for themselves that they can ‘own’, and empowering them to do things differently. Hallbom and Warrenton-Smith (2005) recommend the following coaching techniques:

• Ask high-impact question – ‘how’ and ‘what’ open-ended questions that spur action rather than ‘why’ questions that require explanations.
• Help people to develop their own answers and action plans.
• Identify what people are doing right and then make the most of it rather than just trying to fix the problems – coaching is success driven.
• Build rapport and trust – make it safe for employees to express their concerns and ideas.
• Get employees to work out answers for themselves – people often resist being told what to do, or how to do it.

A common framework used by coaches is the GROW model:

‘G’ - is for the goal of coaching – this needs to be expressed in specific measurable terms that represent a meaningful step towards future development.
‘R’ - is for the reality check – the process of eliciting as full a description as possible of what the person being coached needs to learn.
‘O’ - is for option generation – the identification of as many solutions and actions as possible.
‘W’ - is for wrapping up or ‘will do’ – when the coach ensures that the individual being coached is committed to action.

The following is an example of ‘GROW’ coaching process used in a retail company.

Goal

In practice, when managers start to coach, most of the role involves asking questions that will help the individuals work out for themselves what their goal is. To aid this process, a list of questions is provided, with the goal usually being one of the objectives or the performance criteria standard. Like the main objectives, all goals need to be SMART.

Reality

The second stage, ‘Reality’, examines the current situation and what the individual has been doing and achieving. To aid this process, managers collect together examples to use in the coaching process. In addition, the company’s guidance notes give a list of questions to ask to gain a perspective on the individuals’ views and understanding of various situations. Among the list of questions are:

• What is the situation at the moment?
• Who else is or could be involved?
• What is their perception of the situation?
• What would be happening/what would it look like if it were perfect?
• On a scale of 1 to 10, what is it like now? What improvement do you want?
• What are the barriers to moving from X out of 10 to Y out of 10?
• What is holding you back?
• What have you tried so far? What were the results?

Options

‘Options’, the third stage, attempts to encourage employees to come up with ideas on what they could do to achieve their objectives or reach the performance criteria standard. Again, a list of guidance questions is given to managers to help with the process, but this time there is an attempt to explore some of the more unconventional solutions that staff might have. The company stresses that the session should allow employees to think quite broadly and that managers should not criticize any ideas that emerge. Once employees run out of ideas, then managers provide their own.

Will

The final stage of the coaching process is to formulate an action plan, outlining what the individual is going to do. The plan, the company says, should be specific with clear deadlines. Once more, the company provides a number of questions to inform thinking, including:

• What are the next steps?
• Precisely when will you do them?
• What might get in the way?
• What support do you need?
• How and when will you get that support?
• What further help do you want from me?

In addition, managers need to identify possible obstacles and agree what can be done about them, as well as agreeing the support the individual will need and how it will be provided via coaching and training. Managers are advised to focus on the individual’s behaviour and what the individual needs to do differently, but are told that this should not relate to their personality. Nevertheless, it can mean focusing on small, manageable pieces of behavioural change. This stage could also involve explaining fully and specifically what the individual needs to do, while picking examples of when people did do well in the past can sometimes prove useful and can be built on. What is important at this stage, the company says, is involving the individual in developing the solution to make it more likely that they are committed to the action plan.

Coaching skills

A good coach is one who questions and listens. Coaching will be most effective when the coach understands that his or her role is to help people to learn, and when individuals are motivated to learn. They should be aware that their present level of knowledge or skill or their behaviour needs to be improved if they are going to perform their work to their own and to others’ satisfaction. Individuals should be given guidance on what they should be learning and feedback on how they are doing, and, because learning is an active not a passive process, they should be actively involved with their coach, who should be constructive, building on strengths and experience.

To do all this good coaches have listening, analytical and interviewing skills and the ability to use questioning techniques, give and receive performance feedback, and create a supportive environment conducive to coaching. These are demanding requirements and managers need encouragement, guidance, training and, indeed, coaching to meet them.

Developing a coaching culture

On the basis of CIPD research, Clutterback and Megginson (2005) described a coaching culture as one where ‘coaching is the predominant style of managing and working together and where commitment to improving the organization is embedded in a parallel commitment to improving the people’. A culture of coaching is linked to the basic performance management processes of providing feedback and reinforcement as the following quotation explains.

A culture of coaching (Lindbom, 2007)

A culture of coaching is one in which the regular review of performance and just-in-time feedback is expected. Employees depend on reinforcement when they have done things correctly, and understand that a constructive critique of their work when it needs improvement help them to be more effective. For managers, this culture sets the standard for recognition for jobs well done. The culture of coaching also sets the expectation for feedback – positive or for improvement – that is specific, behavioural and results based. This type of culture is self-reinforcing as it leads to improved performance, which encourages employees to seek more feedback and managers to see the value of coaching as the key requirement of their job.

Evered and Selman (1989) made huge claims for the importance of developing a coaching culture when they argued that good coaching was the essential feature of really effective management. They advocated a paradigm in which ‘the process of creating an organizational culture for coaching becomes the core managerial activity’, and where coaching is viewed ‘not as a subset of the field of management but rather as the heart of management’.

In a coaching culture managers believe that people can succeed, that they can contribute to their success and that they can identify what people need to be able to do to improve their performance. They recognize that coaching can provide motivation, structure and effective learning and see performance management as an enabling, empowering process that focuses on learning requirements. Hamlin, Ellinger and Beattie (2006) commented on the basis of their research: ‘Truly effective managers and managerial leaders are those who embed effective coaching into the heart of their management practice.’

Developing a coaching culture in which managers have the skills and commitment to coach informally as well as on more formal occasions is difficult. It takes time and is a matter of guidance, training, encouragement and the example provided by senior managers and colleagues. As Lindbom (2007 emphasizes: ‘Coaching must become part of the organization’s identity by including it in core competencies and behaviour expectations.’ HR or learning and development specialists have an important role. They can act as mentors (or establish a team of mentors) to provide guidance and emphasize the added value that can be obtained from coaching to the benefit not only of the individual but also the manager and the organization.

Recognizing and Rewarding High Performance

The question of how to motivate employees has always loomed large over managers. Most of management comes down to mastering skills and techniques for motivating people – to make them better, more-productive employees who love their jobs more than anything else in the world. (Okay, maybe you’d be happy if they just like their jobs and didn’t complain so much.)

You can motivate employees in two ways: rewards and punishments. If employees do what you want to do, thank them with positive consequences such as recognition, awards, money, promotions, and rewards. Alternatively, if employees don’t do what you want, punish them with negative consequences such as warnings, reprimands, demotions, firings, and so on. By nature, employees seek positive consequences and shy away from negative consequences.

This chapter deals with the positive side of employee motivation, especially recognition and rewards. (We cover the punishment side in Chapter 18.)

Managing Positive Consequences

Research shows that you can improve employee performance more effectively by using positive consequences than negative ones. We aren’t saying that negative consequences don’t have a place; sometimes you have no choice but to punish, reprimand, or even terminate employees. However, first give your employees the benefit of the doubt and assume that they want to do a good job. Then acknowledge them what they do. This chapter helps you use positive recognition, praise, and rewards to encourage the behaviors you seek and catch people doing things right. You’ll motivate your employees to excel in their jobs, you’ll improve performance and morale, you’ll be more successful, and your company will evolve into a better place to work.

By leading with positive reinforcers, not only do you inspire your employees to do what you want, but you also develop happier, more productive employees in the process – and that combination is tough to beat!

The most proven driver of desired behavior and performance known to mankind is positive reinforcement, which can be simply summarized in the phrase “You get what you reward.” As a manager in any organization, you’ll get more of the desired performance from your employees by taking the time to notice, recognize, and reward them when they excel in their work than anything else you could possibly do.

Consequences drive performance of any kind, and positive consequences such as employee recognition are needed to systematically reinforce successes and desired behavior when they occur.

This seems like a common-sense notion, yet in practice, positive reinforcement often doesn’t happen. Consider this example. You have two employees: Employee A is incredibly talented, and Employee B is a marginal performer. You give similar assignments to both employees. Employee A completes the assignment before the due date and turns it in with no errors. Because Employee A is already done, you give him two additional assignments. Meanwhile, Employee B not only runs late, but when he finally turns in the report you requested, it is full of errors. Because you’re now under a time crunch, you accept Employee B’s report and correct it yourself.

What’s wrong with this picture? You’ve shown Employee B that submitting substandard work behind schedule is okay. Furthermore, he sees that you’ll personally fix it! You’ve rewarded an employee who clearly doesn’t deserve it.

On the other hand, you’ve given Employee A more work for being a diligent, outstanding worker, so you’re actually punishing him. You may think nothing of assigning more work to Employee A, but he knows the score. When Employee A sees that all he gets for being an outstanding performer is more work (while you let Employee B get away with doing less work), he’s not going to like it. And if you end up giving both employees basically the same raise (and don’t think they won’t find out), you make the problem worse. You will lose Employee A, either literally, when he takes another job, or in spirit, when he stops working so hard.

Turkeys for holidays

Here’s an example of how an intended positive consequence can and does go wrong. Bob has a great story about a large California aerospace manufacturer that decided to thank all its employees at Christmas with a turkey for the holidays. Sounds good so far, doesn’t it? However, some employees noticed that their turkeys were smaller than their co-workers’ turkeys. Soon the complaints reached the executive suites – employees with smaller turkeys thought they were being punished for poor performance.

Naturally, management couldn’t overlook this misconception. The following year, management instructed the supplier of the Christmas turkeys to supply turkeys of the same weight. The turkey supplier responded that all turkeys were not created equal. Supplying thousands of identical-weight turkeys would be impossible. Faced with this dilemma, management did what only management could do: it attached a printed note stating, “The weight of your turkey does not necessarily reflect your performance over the last year.”

Complaints continued, and the situation only worsened. Some employees wanted a choice between turkey and ham; others wanted a fruit basket, and so on. As the years went by, management found it necessary to hire a full-time turkey administrator! Finally, the annual Christmas turkey program came to a crashing halt when management discovered that certain employees were so disillusioned that they were dumping the turkeys out of their boxes, filing the boxes with company-owned tools, and sneaking them past security.

Did the company achieve its goal of equal reward for all? Obviously not. The program didn’t boost employee performance or morale; it only caused a new set of management problems.

If you never take the time to thank and appreciate your employees for a job well done, all your top performers will eventually realize that doing their best work is not in their best interest. They’ll leave to find an organization that value their contribution or they’ll simply kick back and forget about doing their best work because no one (that means you, the manager) seems to care anyway!

Nothing is as unfair at work as the equal treatment of unequal performers. Before you set up a system to recognize and reward your employees, make sure you know exactly what behaviors you want to reward and check periodically to see what you set up is working. (See the later section “Creating a Recognition and Rewards System” for more guidance in setting up a system to motivate employees.)

Positive consequences bring about positive results, and what you do doesn’t have to cost a lot of money to be effective. When cash flows freely, many companies don’t hold back on the rewards, incentives, and perks for employees.

During the good times, such rewards are often an essential retention and motivation strategy. However, in tough and challenging times, many companies have found that they can’t afford to reward employees as they did before, but they also can’t afford not to reward them as well. Research by Accountemps found that 19 percent, the second highest category, reported that “recognition programs” served as one of the best remedies for low employee morale, and 13 percent of executives reported that offering financial rewards was an important aspect for improving employee morale in tough times; 11 percent of executives felt that “unexpected rewards” helped to improve morale.

According to a recent survey by incentive company Maritz, employees who work at recognition-oriented companies are

• Five times more likely to feel valued
• Seven times more likely to stay with the company
• Six times more likely to invest in the company
• Eleven times more likely to feel completely committed

Every company needs this commitment and effort from employees, especially in difficult times. A recent Tower Perrins study reports that committed employees deliver 57 percent more effort than uncommitted ones.

Figuring Out What Motivates Today’s Employees

Studies show that what managers believe their employees most want from their jobs differs considerably from what employees report as being most desirable. Nonmonetary forms of recognition are generally more effective motivators than monetary ones – including cash. Although simple forms of recognition such as verbal praise and written thank-you notes are proven to work as motivation, many employees report that they seldom receive such incentives during the course of their careers; it’s an enormous opportunity lost for countless organizations.

Using a variety of motivating incentives

According to Dr. Gerald Graham of Wichita State University, the most motivating incentives (as reported by employees today) are

• Manager-initiated incentives: Instead of coming from some nebulous ad-hoc committee or corporate bigwig, or appearing completely out of the blue, the most valuable recognition comes directly from one’s supervisor or manager.
• Performance-based incentives: Employees want to be recognized for the jobs they’re hired to do. The most effective incentives are based on job performance, not on non-performance-related factors such as attendance, attire, or a lucky number drawn out of a hat at the monthly sales meeting.

For employees, the most motivating incentives are initiated by managers instead of the organization and are contingent on performance instead of provided just for showing up at work. Recognition is most meaningful when it’s given as soon as possible after the desired behavior or performance.

Don’t reserve recognition for special occasions only – and don’t just use it with the top performers. All employees need to be recognized when they do good work in their jobs. Your employees are doing good things that you want them to do every day. Catch them doing something right, and recognize their successes regularly and often!

The following incentives are simple to execute and take little time, yet they’re the most motivating for employees:

• Give an employee personal or written congratulations for a job well done. Do it timely, often, and sincerely.
• Acknowledge employees in a public setting such as a company newsletter or department staff meeting, for maximum value.
• Offer time off or flexibility in working hours.
• Take the time to meet with and listen to employees – as much as they need or want.
• Give employees specific and frequent feedback about their performance. Support them in improving performance.
• Publicly recognize, reward and promote top performers; deal with low and marginal performers so that they can improve or leave (see Chapters 17 and 18 for guidance in these situations).
• Provide information on how the company makes and loses money, details on upcoming products, and specifics on services and strategies for competing. Explain the employee’s role in the overall plan.
• Involve employees in decisions, especially decisions that affect them. Involvement equals commitment.
• Give employees a chance to grow and develop new skills; encourage them to be their best. Show them how you can help them meet their goals while achieving the organization’s goals. Create a partnership with each employee.
• Give employee’s a sense of ownership in their work and their work environment. This ownership may be symbolic – for example, business cards for all employees, regardless of whether they need them to do their jobs.
• Strive to create a work environment that’s open, trusting, and fun. Encourage new ideas, suggestions, and initiative. Help employees learn from mistakes; don’t punish them for their missteps.
• Celebrate the successes of the company, the department, and the individuals within. Take time for team- and morale-building meetings and activities. Be creative and fresh.

For comprehensive listings of incentive ideas that really works, check out Bob’s best-selling books 1001 Ways to Reward Employees, 1001 Ways to Energize Employees, The 1001 Rewards & Recognition Fieldbook, and 1001 Ways to Take Initiative at Work, available from nelson-motivation.com.

Creating a supportive work environment

Employee motivation is a moving target that’s constantly changing with today’s employees. The incredible speed and acceleration of change in business coupled with the impact of technology and expanded global competitive forces has placed pressure on managers to get the most from each employee. With these forces pressing in from all sides, managers can have difficulty keeping up with what employees need to do, much less figure out what to tell them to do. Inspiring managers must embrace these changing business forces and management trends. Instead of using the power of their positions to motivate workers, managers must use the power of their ideas. Instead of using threats and intimidation to get things done, managers must create environments that support their employees and allow creativity to flourish.

As a manager, you can create a supportive workplace in the following ways:

• Build and maintain trust and respect. Employees stay motivates to perform their best if their managers trust and respect them. By including employees in the decision-making process, managers get better ideas (that are easier to implement) and, at the same time, improve employee morale, loyalty, and commitment.
• Open the channels of communication. All your employees must communicate openly and honestly with one another. Quick and efficient communication throughout your organization may be the factor that differentiates you from your competition. Encourage your employees to speak up, offer suggestions, and break down organizational barriers such as rampant departmentalization turf wars that separate them from one another. A collaborative environment will foster group success and build team respect and engagement.
• Make your employees feel safe. Can your employees tell you bad news as comfortably as they can good news? If not, you haven’t created a safe environment for your employees. Everyone makes mistakes; people discover valuable lessons from them. If you want motivated employees, let them take chances and share the bad along with the good. Avoid the urge to punish then when they make a mistake.
• Develop your greatest asset – your employees. The job of managing has shifted drastically from telling people what to do to finding out what best motivates employees and getting the work done through those motivations. Along the way, you can challenge your employees to improve their skills and knowledge, and give them the support and training they need to do so. Acknowledge their contributions and continually work with them on what they want and need. Concentrate on the positive progress employees make, and recognize and reward their success whenever possible. Above all, be honest with them and always show integrity; after all, they’re watching you!

Realizing that you hold the key to your employee’s motivation

In our experience, most managers believe that their employees determine how motivated they choose to be. Managers tend to think that some employees naturally have good attitudes, that others naturally have bad attitudes, and that they are (as managers) can’t do much to change these attitudes. “If only we could unleash the same passion and energy people have for their families and hobbies,” these managers think. “Then we could really get something done around here!”

As convenient as blaming your employees for their bad attitudes may be, looking in a mirror may be a more honest approach. Studies show that, for the most part, you determine how motivated (and unmotivated) your employees are. Managers create a motivating environment that makes it easier for employees to be motivated. When the time comes, recognize and reward them fairly and equitably for the work they do well.

A day at the spa

Instead of issuing bonuses, the owner of Swanky Bubbles Restaurant and Champagne Bar in Philadelphia gave his employees gift cards to an upscale spa and salon. He saved thousands of dollars, and employees still felt rewarded. Employees also had the opportunity to spend time together outside of work – something many simply aren’t able to do – which resulted in a greater sense of teamwork and camaraderie.

When you give out rewards, keep in mind that employees don’t want hand-outs, and they hate favouritism. Don’t give recognition when none is warranted. Don’t give recognition just to be nice or with the hope that people will like you better. Provide rewards for performance that helps you be mutually successful. Giving rewards inappropriately not only cheapens the value of the incentives, but it also lowers your credibility in the eyes of your other employees. Trust and credibility with your employees are two of the most important qualities you can build in your relationship with your employees; if you lose these qualities, you risk losing the employees.

The following recommendations can help you seek out the positive in your employees and reinforce the behaviors you want:

• Have high expectations for your employee’s abilities: If you believe that your employees can be outstanding, soon they will believe it, too. When Peter was growing up, his parents rarely needed to punish him when he did something wrongs. He needed only the words, “We know that you can do better” to get him back on course.
• Give your employees the benefit of the doubt: Do you really think your employees want to do a bad job? Unless they’re consciously trying to sabotage your firm, no one wants to do a bad job. Your job is to figure out what you can do to help employees succeed. Additional training, encouragement, and support should be among your first choices – not reprimands and punishment.
• Catch your employees doing things right: although most employees do a good job in most of their work, managers naturally tend to focus on what employees do wrong. Instead of constantly catching your employees doing things wrong, catch them doing things right. Not only can you reinforce the behaviors you want, but you can also make your employees feel good about working for you and for your firm.

Recognizing the limitations of money as a motivator

Most people don’t come to work just for money. We’re not saying that money isn’t important; clearly, it is. We all need money to pay our bills and live in the manner we are accustomed. We’re also not saying that money has no motivational value; clearly, it does. And the strength of that motivation varies during one’s life. For example, if you’re about to buy a new home, you have some unexpected medical bills, or you have children in college, you’re more keenly aware of your monetary needs and are much motivated by cash.

But for most people, most of the time, when you’re able to comfortable pay your monthly bills, your self-esteem quickly and inevitably turns to other factors that have much greater significance: feeling that you’re making a contribution, having a manager who tells you when you do a good job, having the respect of your peers and colleagues, feeling like a valued part of a team, being involved and informed about what’s going on in the company, and doing meaningful and interesting work.

The money employees are paid is compensation. That money is a product of your company’s compensation philosophy and policies, its market, and its geographic considerations. Recognition is not compensation; it’s what you offer employees above and beyond compensation to get the best effort from them.

According to management theorist Frederick Herzberg, a fair salary is considered a hygiene factor – something employees need to do the job they’re hired to do. Hygiene factors include other basis needs, such as adequate workspace, sufficient lighting, and a comfortable environment. Hygiene factors enable employees to do their jobs – but not their best jobs possible. Getting people to do their best jobs is the function of what Herzberg calls motivators. Motivators include praise and recognition, challenging work, and growth and development opportunities. In essence, there’s a huge difference between getting people to come to work in the first place and getting them to do their best work.

Unfortunately, many people correlate the amount of money they earn with their perceived worth to the organization. Higher pay indicates higher worth, and lower pay means lower worth. Avoid responding just to employees who constantly ask for more money. Why? Because you want to reinforce results, not requests. You’ll never get the best effort from employees just by paying them more. Employees who only want more money will never be satisfied with what they’re paid. Their expectations will always arise with each salary increase.

When incentives become entitlements

Employees who receive annual bonuses and other periodic, money-based rewards quickly come to consider them part of their basic pay. Money becomes an expectation and then an entitlement for many, if not most, workers.

Peter once worked at a company where he received an annual bonus that amounted to approximately 10 percent of his annual pay. The first he received the bonus, he was excited by it. His motivation skyrocketed, and he pledged his eternal loyalty to the firm.

However, after Peter realized that receiving the bonus was going to be an annual event, be quickly took it for granted. In his mind, he converted the reward (for work above and beyond his basic job description) into a part of his basic compensation package. As far as Peter was concerned, his annual salary was really the amount of his base pay plus the annual bonus. He even based his holiday spending plans on the assumption that the bonus would arrive on or about a certain date – and it always did. Of course, if one year he hadn’t received the bonus, disappointment and open hostility would have erupted in its absence.

But since money is a basic need, don’t you sometimes have to pay people well first, before the other factors we’ve discussed come into play? This question came up at a conference keynote presentation Bob was giving, and he was delighted to have another member of the audience stand up and say, “Not necessarily! I’ve found that, using positive reinforcement, I was able to increase the level of performance of my employees, which led to increased sales revenues, which ultimately made it possible to pay people better.” In other words, nonmonetary incentives became the catalyst for improving employee productivity, enabling everyone to gain financially in the process.

You have to make employees feel valued so that they want to do their best work on a daily basis, to consistently act in the best interests of the organization. If you truly want your company to be competitive in today’s fast-moving, global marketplace, you need to obtain extraordinary results from ordinary people. You can get such results from your employees by focusing your attention on how you treat them. For the best results, pay employees fairly but treat them superbly.

As a busy manager, you may like the convenience of cash rewards because you simply fill out a check request once a year to take care of all your motivation for the year. Manager-initiated rewards based on performance may sound like a lot of work. To be frank, running an effective rewards program does take more work than running a simple but ineffective one. But as we show you in this chapter, the best rewards can be quite simple. When you get the hang of using them, you can easily integrate them into your daily routine and management practice.

When it comes to rewards, far too many managers believe that their employees want only more money. Certainly, money can be an important way of letting employees know their worth to the organization, but it tends not to be a sustaining motivational factor to most individuals. Cash rewards such as salary, bonuses and merit increases are important, but seldom are they the only motivators that spark employees to apply their best efforts on the job.

A recent study by Maritz revealed the following anomalies about cash rewards:

• Rewards that are strictly monetary are not as effective as non-cash based items. Monetary rewards tend to be less personal, so they hinder the opportunity to develop and grow interpersonal relationships.
• Monetary rewards do little to establish a link between the behavior and the incentive. Instead of furthering company values, money alone can diminish core value.

Cash rewards involve one more problem. In most organizations, performance reviews – and corresponding salary increases – occur only once a year (or even less often if salaries are frozen). The most effective motivators are typically recent events within the immediate work group, such as being thanked for doing a good job, gaining a manager’s support, and being praised before others. To motivate employees, you need to recognize and reward achievements and progress toward goals on a daily basis.

Creating a Recognition and Rewards System

Motivated employees don’t emerge miraculously. You need a plan to reinforce the behavior you want:

1. Create a supportive environment for your employees by first finding out what they most value.
2. Design ways to implement recognition to thank and acknowledge employees when they do good work. Act on recognition opportunities as they arise, realizing that what motivates some employees doesn’t motivate others.
3. Acknowledge employees’ contributions and continually work with them on what they want and need. But be honest with them and always show integrity; after all, they’re watching you.
4. Stick with your recognition plan over time, but be prepared to make changes to your plan based on what works and what doesn’t.

In general, employees are more strongly motivated by the potential to earn rewards than they are by fear of punishment. Clearly, a well-constructed and well-planned rewards system is important in creating a motivated, effective workforce. Consider some simple guidelines when setting up a system of low-cost rewards in your organization:

• Link rewards to organizational goals. To be effective, rewards need to reinforce the behavior that leads to an organization’s goals. Use rewards to increase the frequency of desired behavior and decrease the frequency of undesired behavior. For example, find ways to recognize the organization’s core values or most pressing strategic objectives for the current quarter.
• Define parameters and mechanics. After you identify the behaviors you want to reinforce, develop the specifics of your rewards system. Establish clear and easily understandable rules. Make the targets attainable and ensure that all employees have a chance to obtain rewards. For example, all employees should have an opportunity to be recognized for achievements of their positions, not just salespeople for sales.
• Obtain commitment and support. To get the best results, plan and implement your rewards program with direct involvement from both your employees and your managers. You need to market your program throughout the organization on an ongoing basis, reminding everyone of the importance of recognition, past successes, available tools, and benefits to the organization.
• Monitor effectiveness. Is your rewards system getting the results you want? If not, take another look at the behaviors you want to reinforce and make sure that your rewards are closely linked. Even the most successful rewards programs tend to lose their effectiveness over time as employees begin to take them for granted. Keep your program fresh by discontinuing rewards that have lost their luster and bringing in new ones from time to time.

Using Praise and Recognition to Everyone’s Advantage

A common misconception about using rewards and recognition to motivate employees is that it costs a company too much money – money that should be devoted to other purposes, especially when budgets are tight. This misconception is problematic enough in times of high economic growth and prosperity, but it’s particularly damaging in down economic times. Rewards, recognition, and praise don’t need to be lavish or expensive to be effective. The most motivating and meaningful forms of recognition, as reported by today’s employees, typically cost little or nothing.

Including four types of praise

Bob’s research has found that simple praise for doing good work takes four of the top ten spots of desired employee motivators:

• Personal praise: Face-to-face thanks and acknowledgement for a job well done
• Written praise: A written note or formal letter of thanks
• Electronic praise: Personal thanks and acknowledgement via e-mail or voice mail
• Public praise: Recognition in front of one or more other people, in a public forum such as a meeting or broad form of communication such as a newsletter or newspaper

At first glance, these different forms of praise may all seem like a single dimension – employee praise – but they aren’t. Each of these dimensions is mutually exclusive and provides a different and distinct value and meaning to individual employees. All these forms of praise are important to employees.

At meetings, allocate some time to recognize outstanding effort or share success stories. Ending meetings on a high note, especially when the agenda is laden with less-than-happy items, is a great way to remind employees that, even in downtimes, positive things are still happening.

Using elements of a good praising

In the workplace, praise is priceless, yet it costs nothing. In one recent poll, workers named personal praise from their manager for doing a good job as the most motivating incentive, yet almost 60 percent of employees say they seldom, if ever, receive such praise from their manager. Although giving effective praise may seem like common sense, many people have never learned how to do it.

Use the acronym ASAP3 to remember the essential elements of good praise:

• As soon: Timing is important when using positive reinforcement. Praise employees as soon as they complete an achievement or display a desired behavior. The sooner you notice and reinforce desired behavior, the more likely the employee and others in the workplace are to repeat that behavior. You may even interrupt someone in a meeting to provide a quick word of praise, until you’re able to discuss the achievement at greater length.
• As sincere: Words alone can fall flat if you aren’t sincere in why you’re praising. Offer praise because you’re truly appreciative and excited about the other person’s success; otherwise, your efforts may come across as manipulative tactic (something you do only when you want an employee to work late, for example).
• As specific: Avoid generalities in favour of details of the achievement. “You really turned that angry customer around. You let him unload all his emotions and then focused on what you could do for him.” Specifics give credibility to your praising and also serve a practical purpose of stating exactly what was good about a behavior or achievement.
• As personal: A key to conveying your message is praising in person, face-to-face, whenever possible. This shows that you value the activity enough to put aside everything else you have to do and just focus on the other person. Because everyone gas limited time, taking time to interact personally indicates that this activity has a higher value to you.
• As positive: Too many managers undercut praise with a concluding note of criticism. When you say something like “You did a great job on this report, but there were quite a few typos,” the but verbally erases everything that came before. Save the corrective feedback for an employee development discussion.
• As proactive: Most managers need to take the time and effort to praise more frequently. Look for opportunities to praise whenever positive news arises, such as in staff meetings; use praising tools such as thank-you note cards, voice mail, or notations on your planning calendar. Lead with the positive and by catching people doing things right, or you’ll tend to be reactive in your interactions with others and will primarily focus on mistakes.

You can praise an employee directly or in front of others. You can even praise employees when they aren’t around, knowing that your remarks will more than likely make their way back to them.

Covering key aspects of effective recognition

Even more important than money to today’s employees is getting recognition for the job they’re doing, especially when they’re doing it well. Bob’s research has found that, almost universally (more than 99 percent of the time), today’s employees want and expect to be recognized when they do good work. However, only 12 percent of employees report that they’re consistently recognized in ways that are important to them; three times as many employees (36 percent) report that they’re definitely not recognized in meaningful ways, and most employees (85 percent) say they feel overworked and underappreciated.

When done well. The act of recognizing an employee should take into account the following considerations:

• Contingency: Contingency relates to how closely the recognition is tied to the behavior recognized. Contingent recognition is given only when an employee exhibits some sort of desired behavior or performance, such as when an employee handles a difficult customer request or completes a project on time. Noncontingent recognition is generalized; it may be given, for example, when an organization holds a company picnic for all employees or celebrates an employee’s birthday.
• Timing: Recognition is most meaningful when it’s given as soon as possible after the desired behavior or performance. Recognition loses meaning (or can even become alienating to the recipient) when it’s not timely, which means that saving up individual recognition for an annual performance appraisal or rewards banquet can be counterproductive.
• Frequency: Positive reinforcement is most effective in shaping desired behavior or performance when it’s frequent, at least until the behavior becomes established. For recognition to reinforce performance, the recognition itself has to be reinforced. Frequency should always be considered when designing a rewards and recognition program.

Organizations typically use nonmonetary recognition on a formal yet infrequent basis around specific events, such as when celebrating a record sales quarter. If a company wants to institutionalize nonmonetary recognition, it often establishes programs, such as an employee-of-the-month program or a safety awards program. Or it can go further, making this kind of recognition a daily part of management practices, such as with daily feedback on performance, personal one-on-one praise, and frequent thank-you notes.

• Formality:  A formal reward is one of the stems from a planned and agreed-upon program of incentives. Examples of formal rewards include employee-of-the-month programs, years-of-service awards, and attendance awards. An informal reward is more spontaneous and flexible, often stemming from the relationship between the parties involved. Examples of informal rewards include a personal word of thanks for a job well done or recognition in a staff meeting for excellent customer service. Formality leads to a pattern of defined behaviors, whereas informality leads to a pattern of interacting roles.
• Recognition setting and context: Recognition can be given to an employee privately or in front of some or all of the company’s personnel. Everyone likes a spontaneous personal word of thanks, but recipients tend to value formal praise more highly – although shy individuals (perhaps 20 percent of the population) usually prefer private and less formal displays of gratitude. Make sure you take into account your employee’s personal nature. You can present recognition impersonally, such as by mail, or in a personal manner, even anecdotally and emotionally. Most employees prefer recognition presented with a personal touch, regardless of the size of the audience.
• Significance of the provider: In general, employees highly value manager-initiated recognition, but who should provide the recognition: the individual with the most status or the one with a special relationship to the recipient? There’s a trade-off when the person with the most emotional significance to the recipient doesn’t also have power within the organization hierarchy.
• Value to the recipient: Recognition is more meaningful when the recipient highly values the form it takes. One individual may value rewards that relate to the job, such as specialized work tool, a software upgrade, or an educational opportunity; another individual may value rewards that relate to his personal and family life and that he can share with others. Such rewards might include dinner out with a significant other, a weekend getaway, a barbecue set, or tickets to a sporting event. Customize rewards and recognition for the recipient.
  Consider whether the recipient would most value tangible recognition, intangible recognition, or both. Tangible recognition might be a trophy or plaque. Intangible or symbolic recognition includes ceremonies, public announcements, time off, or the gift of more responsibility or more space, as in a corner office.

The best managers may have always been skilled at providing recognition to employees, but organizations today need every manager to be rewards-and-recognition savvy to create the kind of workplace where we all want to work.

Incentives at Google and why they work

Employees of Google save both time and money by staying outside to eat. Beyond enjoying three free meals each day, employees who eat at the company cafeteria interact with each other, creating a sense of community and idea sharing. They can also take advantage of onsite car washes and oil changes so that they don’t have to spend their lunch hours or other work time taking care of this routine tasks. The added benefit of checking one more task off their personal to-do list also makes employees more productive and less distracted.

Making an impact with a simple “Thanks”

It all starts with a thank-you. And sometimes that’s all it takes. Most employees don’t just need to be thanked for something they’ve done well – they expect it. And they expect it to be done immediately or soon after their good performance. Waiting too long shows indifference and implies that the praise is more of an afterthought or something you’ve put off. Even affirmation from co-workers can change employees’ attitudes and give them a greater sense of meaning and purpose.

Employees need to feel as though their efforts are well spent, even if the results can realistically be classified as only baby steps. Focusing on accomplishments gives your employees the encouragement they may need to keep moving forward in a difficult time. If they feel as though they’re consistently giving their all, only to hear that the effort isn’t enough, even the most enthusiastic employees will be undermined.

Although recognition of success is important to include in regular communication and meetings, unexpected celebrations can also be effective. Systematically taking the time to point out your employees’ strengths and successes can help overcome the cloud of negative energy that befalls an organization during the downtimes.

As we note at the beginning of this chapter, you’re more likely to lead your employees to great results by focusing on their positive accomplishments than by finding fault with their negative outcomes. Despite this fact, many managers’ primary mode of operation is correcting employees’ mistakes instead of complimenting their successes.

In one study, 58 percent of employees ranked a personal thank-you from their managers as their most motivating incentive, yet those same employees reported that they seldom received such thanks. The employees ranked written hanks for doing a good job as motivating incentive number two, yet 76 percent said they seldom received thanks from their managers. Perhaps these statistics show why a lack of praise and recognition is one of the leading reasons people leave their jobs.

Years of psychological research have clearly shown that positive reinforcement works better than negative reinforcement, for a couple of reasons:

• It increases the frequency of the desired behavior.
• It creates good feelings within employees.

On the other hand, negative reinforcement may decrease the frequency of undesired behavior, but it doesn’t necessarily result in the desired behavior.

Instead of being motivated to do better, employees who receive only criticism from their managers eventually just avoid their managers whenever possible. Furthermore, negative reinforcement (particularly when manifested in ways that degrade employees and their personal sense of worth) can create tremendously bad feelings with employees. And employees who are unhappy with their employers have much more difficult time doing a good job than contented employees.

Making a big deal about little things

Should you reward your employees for their little day-to-day successes, or should you save up rewards for when they accomplish something major? The answer to this question lies in the way most people get their work done on a daily basis.

For most people on business, work isn’t a string of dazzling successes that come after another without fail. Instead, the majority of work consists of routine activities. Employees perform most of these duties quietly and with little fanfare. For example, a typical workday may consist of an hour or two of reading memos and e-mail messages, listening to voice-mail messages, and talking to others on the phone. The manager may spend another couple hours in meetings and perhaps another hour in one-on-one discussions with staff members and co-workers, much of which involves dealing with problems as they occur. With additional time spent on preparing reports or filling out forms, the manager devotes precious little time to decision making – the activity that has the greatest impact on organization.

For an hourly or line worker, this dearth of opportunities for dazzling success is even more pronounced. If the employee’s job is assembling lawnmower engines all day (and she does a good, steady job), when does she have an opportunity to be outstanding in the eyes of her supervisor?

American Express recognizes great performers

If you could increase your organization’s net income by 500 percent in a decade, would you take the time to recognize your great performers? The Travel Related Services division of American Express did by creating its Great Performers program to recognize and reward exceptional employee performance. The program accepted nominations from employees, supervisors, and even customers. Winners of the Great Performers award were eligible for selection by a worldwide governing committee to become Grand Award recipients. In addition to an all-expenses-paid trip for two to New York City, Grand Award winners received $4,000 in American Express traveler’s checks, a platinum award pin, and a certificate.

Disney does it right even in the busiest times

One of the biggest challenges in recognizing others is doing it in the midst of the daily operations of your business – that is, when you and your employees are the busiest. The Walt Disney World Dolphin Resort in Orlando, Florida, is an excellent example of how to provide recognition under pressure. Instead of viewing “being busy” as an executive excuse for not recognizing employees, they focus their energies on new and creative ways to increase recognition. For example:

• When surveyed, Dolphin employees reported that managers weren’t around much during busiest times. As a result, management initiated “Five-Minute Chats,” in which all managers were assigned ten employees who didn’t report to them. Their assignment was to check in with each employee for five minutes over the span of 30 days.
• During busy days when employees simultaneously checked in and out more than 1,000 people, supervisors set up refreshments and balloons in the employee area behind the hotel check-in counter. Supervisors were there to cheer employees on and to jump in during employee breaks.
• Dolphin management started using “Wow!” cards, trifolded wallet cards made from different-colored construction paper in which employees and manager could write quick thank-you notes to others who “wowed” a customer or another employee. “Captain Wow,” their very own superhero, dropped by regularly to thank them and acknowledge their work.

No matter what business you’re in, look for the times when you and your employees are most under pressure and develop ways to thank, acknowledge, and recognize employees during those times. Doing so can be the best pressure-relief valve you’ll ever have.

Major accomplishments are usually few and far between, regardless of your place in the organizational chart. Work is a series of small accomplishments that eventually add up to big ones. If you wait to reward your employees for their big successes, you may be waiting a long time.

Reward your employees for their small successes as well as their big ones. You may set a lofty goals for your employees to achieve – one that stretches their abilities and tests their resolve – but remember that praising your employees’ progress toward the goal is perhaps more important than praising them when they finally reach it.

Finding power in peer-initiated recognition

All employees like to be recognized for a job well done, but recognition from one’s peers carries special significance. Perhaps this is because such awards are seldom expected. Perhaps it’s because everyone knows that managerial favouritism played no part in the selection. Whatever the reason, you can be assured that the recognition is well earned and sincere when employees single out someone from their ranks for recognition and praise.

Tom Tate, program manager for the Office of personnel Management in the Personnel and Management Training Division of the U.S. government, shares a story of the Wingspread Award, an engraved trophy that the division head presents to the division’s special performer. One year, the recipient wanted to also recognize a deserving colleague. The employee passed the award on to that employee, who later wanted to recognize yet another peer. Over time, the award took on great value and prestige because it came from one’s peers. Each recipient could keep it as long as desired until another special performer was discovered. When a recipient was ready to pass it on, a ceremony and lunch was scheduled. Consider these other examples of peer-initiated awards:

• Employees at the Angus Barn Restaurant in Raleigh, North Carolina, vote on The People’s Choice award to recognize a model employee.
• At ICI Pharmaceuticals Group in Wilmington, Delaware, a peer can nominate a fellow employee for the Performance Excellence Award for any idea that helps the business (saves money, increases productivity, and the like) or any action that goes above and beyond the call of duty.
• At Meridian Travel Inc. in Cleveland, Ohio, CEO Cynthia Bender has the company’s 62 employees write in their voted for Employee of the Month. “Managers always have their favourites, but the employees know who pitches in and helps out,” says bender. “This makes employees notice others more and develops camaraderie.”

You can easily encourage employees to recognize other employees, but it’s most likely to happen if you initiate a program in your workplace. At The Ken Blanchard Companies, in Escondido, California, employees use the Eagle Award to recognize other employees for acts of extraordinary service. Whenever an employee performs a work-related favour, another employee can give her a “hatchling” – a sticker of an egg plus a write-up about what that employee did and why it was significant. When an employee receives 16 hatchlings, a group of employees gives her an Eagle Award Plaques during a brief ceremony at her desk. An employee may also get an Eagle Award for a single outstanding event. The program was announced and explained at a company meeting, and a small committee of volunteers administers the mechanics of the program. Employee reception to the program has been strong, and the benefits to the company have been significant.

Give employees some time to recharge

The Corcoran Group, a top real state agency in Manhattan, takes a unique approach to policies during slow times. Founder Barbara Corcoran instituted a practice of giving salespeople an extra few weeks of vacation when sales are down. With not much going on, it’s easier to be short staffed and give employees some time to restore morale and alleviate stress. So far, this practice has been effective: Salespeople return refreshed, with a renewed and positive attitude.

Rewarding employees without Breaking the Bank

Showing appreciation sends the message that the company values employees and wouldn’t be able to operate without them. Involving employees in the reward process promotes a sense of teamwork and helpfulness.

Sometimes the money simply isn’t available for cash rewards or big-ticket items. But you still have the options for showing employees that the company values and appreciates their time and work. Even something as simple as an ice cream social, a company-sponsored lunch, or morning donuts can make employees feel valued.

The Business Journal recognized Core Creative, in Milwaukee, Wisconsin, as one of the “Best Places to Work.” At the end of every summer, the company sets aside time to find a creative way to recognize exceptional employees, both employees who are simply performing well and employees who have gone above and beyond for clients. Another company in the Midwest consistently distributer personal notes from vice presidents and managers and highlights outstanding employees through feature articles on the intranet. Many such effective recognition and reward items have little or no cost.

Consider a few categories when you next want to thank your employees:

• Low-end rewards: This can include items like gift cards from Starbucks or Amazon.com; gas cards; car wash or discount restaurant coupons; gift certificates; or treats such as pizza, donuts, or even a bouquet of flowers. Jeanette Pagliaro, co-owner of Visiting Angels, an elder-care service that operates throughout the United States, often gets positive feedback from clients or supervisors about her employees. Employees who garner such pointed recognition receive Angel Bucks, which they can use to buy prizes at a company-sponsored auction.
• Symbolic recognition: This recognition can take the forms of tokens, pins, ribbons, a certificate, or a plaque that has special meaning.
  Busch Gardens in Tampa, Florida, supplies tokens to all supervisors to give to employees to reinforce core values. Employees can redeem the tokens in their paychecks for $10, but most employees who receive the tokens prefer to keep them and forgo the money.
• Time off: Use time as an award by itself by providing a voucher for a long lunch, a free afternoon, or an additional day off.
  At Greenough Communications in Boston, Massachusetts, high-performing employees are awarded by being able to leave at 3 p.m. on Friday. JS Communications in Los Angeles, California, recently gave employees two free “I Don’t Want to Get Out of Bed” days to use in the forthcoming year.
• Employee perks: You can make simple, low-cost benefits available to all employees. Soft drinks, fresh coffee, bottled water, snacks, and the use of a company fitness room are great for company morale.
  Best, Best and Krieger has held fast to simple employee perks such as “Bagel and Donut Friday” and an annual holiday party as a way to bring employees together in a social setting. Employees at California-based Kiner Communications, a public relations firm, enjoys baskets of fresh fruit and attend a company-sponsored holiday party each year.

If it’s important that your employees work together as a team, you need to recognize the team, teamwork, and team successes when they occur. You can do so through simple celebrations when team goals are achieved or milestones are met. Or you can give the team the opportunity to decide how best to celebrate their successes.

Teambuilding activities are another way to reward the team that can serve a dual purpose. They help unite employees and create an improved sense of community, and they also can be a nice break from the monotony of work, something that’s much needed in a time when morale and spirits are low. As an added benefit to the company and employees alike, such activities promote working together by creating a positive atmosphere in which employees tend to work harder and more efficiently.

Teambuilding with a twist

After General Mills acquired Pillsbury, division leaders came together and organized the Spirit Team. The sole purpose of this group was to organize activities that brought everyone together and sparked positive attitudes. The Spirit team organized volunteer days at a nonprofit organization, building on the ideas that teambuilding can’t be fully accomplished with just one event. Now the group organizes between eight and ten events at the same organization each year. Positive feedback on employee surveys cites a connection to the volunteer program and employee’s good feelings about their jobs and the company.