Aligning Officers & Crew to Achieve Your Goals

When running an organization, it’s easy to define a mission and a vision and then establish goals and objectives.  Achieving those objectives, however, can be another matter. 

Seasoned executives in every sector recognize that two extremely powerful tools available to them to drive execution of goals and objectives are the incentive compensation system and the performance review process.  In this article, I’ll address performance reviews.

The idea of “performance appraisals” has been controversial over the years.  Some companies have eliminated them.  Others had used forced performance rankings at times and many have subsequently eliminated them.  The effective use of a fair performance review tool, though, is to make it an advanced performance planning tool, not a retrospective tool that can produce surprises, lower morale and in many cases trigger a good employee with challenges- but whose past performance has been stellar- from seeking employment elsewhere. The costs of replacing that talent can be staggering given the investment made in that person.

Well run organizations usually have an annual strategic plan development exercise or update process.  Frequently, senior staff, and sometimes others, are involved, and the outcome of that effort can be the source for performance planning.  In my experience we took our forward-looking objectives and embedded them into a performance planning document for each direct report.  Every person was informed on specific issues that needed attention so they could achieve their personal objectives but also that of their leader and the entire enterprise.

In each organization when I did this the first time, some individuals reacted that I had given them the most detailed and useful performance document they had ever received.  And, as we reviewed the organization’s progress in monthly senior staff meetings, the performance objectives often became a motivational reference point in our monthly one-on-one meeting with each direct report.  The benefit of the performance planning became clear.  As we refined this process, along with building measurable incentive compensation plans, every line of business, or company or group of companies where I used the process, experienced increased sales, increased operating income, and increased return on equity every year -- almost without exception.

Fewer surprises. Candid, trackable results throughout the year rather than a “surprise” performance review that looks backwards and is seen as punitive, even insulting. Engaging your team by having them look ahead with customized feedback.  That’s a winning formula.

Organizations don’t align themselves.  Effective managers align them.  In my next article, I’ll share thoughts on effective performance compensation systems and how they can lift your performance planning.