OOPS! 13 Management Practices That Waste Time & Money (and what to do instead)
To achieve management excellence, you need an awareness of faulty practices and a desire to change how you manage your employees. Managing individual behavior is the key to making the whole organization succeed. That requires an understanding of the basic behavior-based principles that drive good performance. Read on to learn about a baker's dozen of widespread misguided management practices and how you can correct them, courtesy of Aubrey Daniels' Oops! 13 Management Practices That Waste Time and Money (Performance Management Publications, 2009). 1. Employee of the Month What goes wrong? This longtime management practice is meant to motivate all employees to deliver superior performance and earn the title of "employee of the month." The problem is only one can earn it while the others are left with performances that go unrecognized violating every known principle of effective positive reinforcement. What to do instead? Understand what you want to achieve as a result of this kind of program, and then establish an initiative based on criteria that recognize all employees who deliver outstanding performance. 2. Stretch Goals What goes wrong? On the surface, stretch goals seem necessary to drive improved performance and because of such, they become a point of contention. Stretch goals are typically set too high. People fail to reach them 90% of the time, leading to discouragement. Efforts toward these goals diminish over time and discretionary effort toward all goals is eventually extinguished. What to do instead? Set many mini-goals. To get the kind of improvement an organization needs, in both people and production, managers need to ensure that positive reinforcement is delivered for the many small achievements along the way to reaching some grand, final goal. 3. Performance Appraisals What goes wrong? Most people are all too familiar with annual performance appraisals as companies have utilized them in one form or another for the past 50 years. The process itself typically falls short due to many things, not the least of which is that any system that doesn't recognize performance as it's happening misses the opportunity to get the most and best from employees. The most serious fault of the typical performance appraisal system is its assumption that all performers cannot receive a top rating at the same time. What to do instead? Appraisal should be continuous. Set up an environment in which each employee knows how well he or she has done at the end of every working day. Evaluate each performer against what he or she is expected to do, not in relation to anyone else. 4. Ranking What goes wrong? Publicly displaying how employees rank based on objective measures is a typical practice in sales environments. The idea behind it is to motivate those at the bottom to try to reach the top and those at the top to work even harder to stay on top. This type of system breeds unhealthy competition and inhibits sharing and teamwork. Your competition is outside your organization, not inside. What to do instead? Look to external benchmarks as a way to breed effective competition and motivation. Evaluate individuals and units in terms of what they need to accomplish, rather than comparing their performance to others'. When the conditions are right, people will not only achieve at high rates but also assist others in doing the same. 5. Undeserved Rewards What goes wrong? As unorthodox as it sounds, every day organizations reward things a dead man can do. A million hours without an accident, a reduction in errors, or perfect attendance can all be accomplished by a corpse. This doesn't qualify as valuable behavior and deserves no celebration. In addition the same error occurs when any perk or benefit is given across the board. That way, employees will want to do just enough to remain on the payroll... --Bloomberg Business WeekOops...you mean there's a better way to improve performance? Last week we discussed getting your team aligned around a critical number, ours being Gross Profit Margin. This week I want to share one or two business practices that are counter intuitive, aka an OOPS! in the Aubrey Daniels book called OOPS! 13 Management Practices That Waste Time and Money. The book is about behavioral science, detailing the basis for how humans behave toward typical ways business is done. You might be just as surprised as I was to find that one of the most relevant, counter intuitive practices outlined here is Salary and Hourly Pay, otherwise known as Oops #6. Daniels says that The modern organization wastes more time and money in the way people are compensated than it wastes in any other area of the business. Salary and hourly pay is pay for showing up, not for performing. Raises are forever. Bonuses are only loosely contingent on performance. Even profit sharing and pay-for-performance plans are poorly designed to create the best performance.  This was a pretty huge slap in the big fat business mug! Talk about changing the current thinking of how we do things! This is the very reason why my company is moving towards a greater portion of income being based on a key critical number, such as gross profit margin as described last week. Even this is not perfect, however, because it doesn t reflect true individual performance. It s funny how the behavior analysis types tend to look at salary jobs as the ticking of the clock rather than performance. Pay-for-performance is the right method behaviorally, as one study in the book exhibited when Safelite Glass Corp switched from salary to piece-rate. The saw a 44% increase in output after the change. Daniels says that 3 things are necessary to obtain the best results: 1 Pinpoint the behaviors and results that add value to the enterprise (this can  take time, but it is the most important part of the process) 2 You must have an easy way to measure the results and behaviors 3 The measure should be one that can be easily tracked by the performer We are considering using a scorecard that lists key activities, putting more weight on the ones that we value the most, to get more focus on performance for our development team. This will be a big leap toward everyone having their mindset on getting the right things done. I am excited to see how this will affect, and hopefully improve our performance. --Entrepreneurial Journey Blog