F. Scott Fitzgerald, the American author of The Great Gatsby and The Last Tycoon, said that “Action is character.” By this he meant that you know who someone is by what they do, more than by what they say. (We will return to Fitzgerald in Part Five, when we consider what the critical path means for the individual employee.)
If action is character, then results are the story. In the world of work, doing is not enough. A common mistake in companies is people saying that they write PR releases for the firm. Or, they support the international operations. Or, they are responsible for social media. Our questions are: Does it matter to the company’s success? If so, how?
In other words, what is your value to the company? How do you define it? How do you measure it?
What would happen to the critical path or the company’s revenues and profits if you stopped doing your job? Would it make much of a difference? Would anyone notice?
From the customers’ or the competitors’ views, would your absence make your company less attractive as a place to do business? If so, how?
From the competitors’ views, would your absence make your company more vulnerable to poaching its customers away? If so, how?
At the extreme, would your company suffer greatly or even collapse if you were to leave? Would the stock price crater?
At the end of the day, it all comes down to this: what value do you (or any job in the organization) add to the critical path? How do you define it and how do you measure it?
Unfortunately, most organizations use flawed performance evaluations. They measure the wrong things and they measure them incorrectly.
Over the years, I have asked thousands of employees whether they think their companies’ performance evaluation system (PE) accurately measures their true contributions and value to their companies. Only a very small percent—2 to 3%—believe in their companies’ PEs. Despite all the time, stress, and emotions spent on them, these workers feel that it is an organizational ritual that, even though it can affect salary increases and promotions, doesn’t reflect their true contributions and is often a waste.
So, what’s the problem? Well, it has many roots. Several major problems undermine the effectiveness of the PE process.
Bad PE Process
First, companies get confused about using the PE process. Is it to help employees with their developmental needs (developmental PE) or to evaluate their actual performance (evaluative PE)? In the former, the purpose is for the employees, in a non-threatening environment, to understand better their strengths and weaknesses in light of the company’s goals and the critical path, and to identify steps they can take to achieve those goals. The employee and the manager generate ideas as to how to build on strong points and how to shore up negatives. It is a mutual exploration process with the main goal of helping the employee set up a developmental plan to become better. The employees should emerge feeling as if they have a blueprint to build up their competencies so that they can add more value to the organization’s critical path.
At its best, the developmental PE is not just one-sided, with the boss holding all the power and the employee having to prove her- or himself. Instead, both the boss and employee commit together to a mutually interdependent plan to achieve critical path results. In essence, they are a team figuring out how to combine their talents and skills to add substantial value to the organization.
In the latter use of PE, employees have their actual work performance evaluated to see if they are contributing and how those contributions compare to those of their co-workers. This is when employees find out if their job performance qualifies them to keep their job and what rewards they should get. This is where they should learn if they made the cut and where they rank in contributing to the critical path. This is where the boss plays judge and the employee is the performer awaiting a score.
Companies get these two forms of PE mixed up, with many companies mushing them together uncomfortably, without a clear sense of what they are trying to accomplish or how to accomplish it. These two forms of PE cannot be done effectively at the same time. In fact, many experts question whether employees will ever be honest in a developmental PE if they know that an evaluative PE will happen in the future. You cannot expect an employee to reveal her weaknesses, as she might feel safe doing in a developmental PE, if she knows that the boss is going to use this to deny her a promotion in the evaluative part of the PE.
Bad PE Forms
Then there is the problem with the actual PE form itself. Some focus on company values, e.g., “Does this person embody the integrity that the company has told the public it will uphold?” Now, what the heck that means is anybody’s guess. Does it mean that they don’t lie, steal, and cheat? Alternatively, is it that they are transparent in all their public dealings? Or, does it mean that they agree with all the social policies that the company supports or resists, such as free trade, carbon emissions, gay rights, pregnancy leave, or morning prayers?
Some PE forms zero in on behaviors or competencies. Does the employee: communicate well? think strategically about issues? exhibit leadership? have emotional intelligence? Can this person convince others to support her or his ideas?
Other PE forms venture into personality. Does the employee possess passion, persistence, drive, or grit? Is she outgoing, cheerful, proactive, and positive? Is he narcissistic, conscientious, pessimistic, or alienating?
Unfortunately, very few PE forms ask about real contributions or economic value added to the critical path.
What’s the Right Number of PE Principles?
Companies also vary dramatically as to what they think is important and how much they think is important. Amazon emphasizes 14 Leadership Principles that range from Customer Obsession to Frugality to Have Backbone. Bridgewater Capital, the largest U.S. hedge fund, has 210 management principles. The consulting firm McKinsey has 3 guiding principles with, in true consulting fashion, 5 sub-principles in bullet form under each of the 3 overall ones. All of these company principles may not be incorporated into the PE form, but they often strongly influence what does end up there.
Lack of Managerial PE Training
To say that that PE is in a state of confusion is an understatement. Add to this mess that most managers are not trained in how to conduct a performance evaluation and you have a recipe for a very broken process. Then, add in that most mangers do not like to give honest feedback if it means hurting the employee’s feelings. Instead, they hem and haw, using euphemisms to cloak their views, such as “You are strong and steady” which actually means that “you are average, bordering on mediocrity.” And when you include jerk bosses who are either threatened by any subordinates, let alone talented ones, or just plain mean-spirited, it’s no wonder that employees do not believe that PE is accurate or worthwhile.
So, what can you do?
Critical Path Action Items
How do you define and measure your value to the critical path?
If you left your company, would it have any significant impact on the critical path?
Do you believe that your organizations PE process truly measures your value to the critical path?
What are the problems with your organization’s current PE process?
Is your manager good at doing the PE process with you and your department?