Bridging New Employees Performance Gap

The news is full of stories about talent management, the importance of getting and keeping the “right” employees, and the impending lack of employees as the workforce changes. With these dire warnings come many ways to select and retain employees.
if you travel, particularly in the U.K., you will recognize this often used phrase: "Mind the gap." You hear it as you enter and exit subways or when you embark upon or depart the trains. You are warned not to fall through the cracks as you transition from one place to another.
The same advice could be given to HR leaders as you start 2007. The news is full of stories about talent management, the importance of getting and keeping the "right" employees, and the impending lack of employees as the workforce changes. With these dire warnings come many ways to select and retain employees. However, in addition to getting them on board, you then have to keep them.
Minding the gap refers to a method of learning from your new-hire talent in order to help the new employee become productive right away. New employees want to be productive, and if they are not, they will leave. This is particularly true for hard-to-get talent.
In this article I will explain the results of a study done with a technology firm that was doing an incredible amount of hiring in 2006. They learned from studying—or "minding"—their gaps.
What is the gap? When you hire a new employee, there is a transition period between the hire date and the time when a new employee becomes optimally productive. This transition denotes a productivity gap, and it is important to minimize this gap in order to create and sustain long-term competitiveness and performance. In our 2006 study, we examined the "productivity gap" for a set of new technology employees.
Productivity gap is defined as the difference between an employee’s energy level at work "today," and the level where the employee is most productive. The calculation is as follows:
Productivity gap = (energy today – energy where most productive)
Why energy? We used energy because it is a validated metric that predicts performance, and our ability to quickly assess energy (one question) allowed us to conduct the research without taking so much time out of the employee’s day that the study itself negatively affects productivity.
How it works: We expect a productivity gap with the majority of new employees. It takes time to learn the job, to make things work with a new team of colleagues, to get processed (e.g., get new computer, find desk, learn how to use phone, equipment, etc.), and more. Thus, we anticipate and find in our work that there is a gap between an employee’s energy at the time of being hired (we study energy at work specifically) and the energy where the employee is most productive. In most cases, the gap is negative.
Typical new employee gap: Energy today = 3 Energy where most productive = 7
Productivity gap = -4
However, we want the gap to be minimal, and we want to close the gap as soon as possible. It is up to the manager to "mind the gap" and work to make sure the gap is reduced. You want the employee to be at the level where he/she is most productive as soon as possible, and you certainly don’t want the gap to increase.
Goals are to reduce the gap or move to a positive gap. It is better for productivity to have an employee working slightly above where most productive; however, our research shows that you do not want the employee to move to a state where she/he is more than one point above where most productive, because prolonged time in that "overly energized" state leads to lower productivity and burnout.
In this study: We examine the gap for 183 employees who started participating in the Pulse Dialogue process during 2006. In this snapshot of the study (which is now continuing), we report data from June to October.
Background: In each data collection, we asked employees to rate their energy level. We also asked for levels where the employee was most productive on this same scale. This is a process that I have researched and validated in numerous studies for the past 10 years (across hundreds of thousands of employees). Unlike many employee metrics, energy is an optimization construct, not a maximization one. That means it is negative to be at the too-high or too-low levels. Thus, we find out where employees are most productive (by asking them at multiple periods of time) and then run analyses using both energy and where people are most productive. Gaps predict outcomes such as turnover, customer service, sales and other performance outcomes. The goal is to reduce the gap and help employees remain at a level of energy where they are most productive.
What did we learn? First, we learned that the trend, overall, was headed in the right direction from June to October. The mean gaps from Time 1 (June) to Time 2 (October) are as follows:
June: -1.16 October - 0.97
Second, we learned that there were significant differences in the trends when the patterns were viewed by manager and then within a manager’s department by job level (or grade). See the graph below as an example:
Productivity Gap ChartManager No. 1: Gap by Job Grade
The goal is for the gap (difference between employee energy and where most productive) to be reduced over time (or for the trend line to go down). That means the employee is moving toward an energy level that is close to where he or she is most productive.
In the chart above, you can clearly see that when it comes to Job Grade 1, this manager is having a very positive experience. Between Time 1 and Time 2, the gap was reduced significantly. But for all other grades (grades 2 through 4), the gap increased. In addition to asking employees to rate energy and where productive, we also asked one open-ended comment question asking them about the new-hire experience. We content-analyzed this data, and we were able to connect the stories to the metrics.
In general, across organizations, we find that more attention is given to the Grade 1 (or entry-level) employees. Everyone expects they need training, mentoring and communications because they are really new. These are the people coming in who have less experience in the field, and it’s accepted by all peers that they need training. However, as one becomes more senior in a career, then there is a natural tendency to let new senior employees take care of themselves. In the current intensively busy environment in which we all work, no one would want to waste time trying to help someone who does not need help. In fact, you might think that it would be a waste of time.
Lessons learned It does not take long to see from the data that, at least with this particular manager’s team, all levels of employees needed help. The trends indicate that the productivity gap went up over time for the more senior people. This represents a productivity problem and a talent management challenge. If new senior employees feel their experience with the organization makes them less productive, they will not stay.
In this sample at least, the employees live in a city where there are ample opportunities to find employment elsewhere. Thus, if the HR team can diagnose a new-hire acculturation problem and act on it, they can save their organization money by reducing search expenses and by optimizing the productivity of the talent that just hired.
When an HR team has data across its organization, it can use data from other parts of the business to help a particular manager. In this case study, we look to the data from Manager No. 2 to understand positive experiences for the senior job grades (see chart below).
Productivity Gap ChartManager No. 2: Gap by Job Grade
The trend data above clearly show that Manager No. 2 is creating an environment where new hires in all job grades are experiencing a reduction in their productivity gap. In contrast to the data from Manager No. 1’s group, the more senior employees are seeing a significant reduction quickly.
The opportunity for HR is to assess what’s working for Manager No. 2 and share those best practices with other managers. This is one of the most effective forms of learning any HR manager can use because learning from peers creates the kind of tactical outcomes for managers that are rarely seen in other types of learning environments.Going beyond traditional talent management Talent management goes beyond just hiring; it means optimizing the talent that you bring into the door. However, in HR few employers are truly studying the new-hire experience in the detail that this case represents. We do a much better job of spending money to do exit interviews than we do to study the experience of new hires. This case is just one example of how data can be used to learn and to break through traditional ways of managing talen

Hallmarks of Organizational Success

Companies that wish to compete successfully in a turbulent business environment characterized by global competition, exploding information technology, fast-paced change, and new employer-employee relationships will inevitably be forced to make significant adjustments in the way they operate. From interviews - conducted in late nineties - with more than 1,000 senior executives and academics, experts at the University of Pennsylvania's Wharton School have developed a set of twelve hallmarks that will characterize the leading corporations of the the twenty first century:

Vision directed - This means having a statement of principles that is not just some high-sounding works tacked up on the wall of the company cafeteria, but a rather clear set of values that actually influence a company's operations and give employees a strong sense of pride in their organizations.

Cross functional - Asea Brown Bovari is a giant corporation with tens of thousands of thousands employees doing business in hundreds of local companies located across the globe. ABB cannot afford to be organized along traditional functional lines (e.g., marketing, manufacturing, R&D) because business decisions involve continuous coordination among many functions. Instead, ABB has a matrix organizational structure, with its local companies grouped by products and services, and again by geographical location.

Flatter & empowered - Information technology, intense competition, and the rapid rate of change have made he old, rigid hierarchies obsolete. Decision making simply cannot move up and down the corporate silos fast enough, so organizations must be fattened and individuals at every level must be empowered to make decisions. But, as John Kotter argues in The leadership Factor, this requires more from managers than they were ever asked to do before. "Figuring out the right thing to do in an environment of uncertainty... and then getting others to accept a new way of doing things demand skills and approaches that most managers did not need in the past. It demands more than technical expertise, adminstrativeability, and traditional management. Operating in the new environment also requires leadership." So an effort at developing leaders throughout the organization must accompany efforts at empowerment and flattening the corporate hierarchy.

Global - Companies like Ford have recognized the advantages that globalization can mean, from buying materials and services in low-cost areas of the world to developing new markets that can help cushion the blow when your domestic sales take a downturn.

Networked - Instead of carrying out every function on their own, companies will often find it far more cost-effective to create partnering arrangements with other firms to perform certain functions. Outsourcing, for example, is currently occurring in almost every field of business, where organizations are recently hiring outside vendors for their legal, audit, and cafeteria operations, security, and janitorial.

Information-technology-based - Computers and communications systems will continue to alter the way companies operate internally while improving relationships with suppliers and cu stormers. At large law firms, for example, computer networks now enable corporate clients to regularly review the work the firm is currently performing on their cases as well as the number of hours being billed to each other.

Stakeholder-focused - As Dr. Jerry Wind of the Wharton School explains, "A company will not be able to operate as a closed entity cut off from society's needs and demands. Management will still give primary attention to its shareholders, ... [but] increasingly, governments, environmental organizations, ... will hold firms accountable for their actions."

Flexible/adaptive - One of the best predictors of a company's long-term performance is its ability to adapt to changes in the marketplace. This requires a culture that encourages experimentation and intelligent risk taking, that incorporates now ideas into the fabric of its operations, and that provides employees with abundant opportunities to develop new skills so that hey can keep pace with change. At Motorolla, for example, the emphasis is on lifelong learning, with employees attending more hours of training annually than at almost any other company in the US. Training programs have enabled the company to achieve an exceptional reputation for product quality and maintain positions of leadership in areas such as computer chips, cellular telephones, and paging equipment.

Customer-driven - While many companies talk about getting close to the customer, some are actually trying to achieve it. Some manufacturing companies, according to Fortune Magazine, recognized that the best way for manufacturing employees to understand customers' needs to regularly travel to their facilities and find out firsthand how they use these companies. The result : significant product improvements.

Total Quality-focused - If any single element can be called the foundation stone of the change process, it is the emphasis on quality. After World War II, W. Edwards Deming and Joseph Juran taught the Japanese the importance of quality and how to attain it. Eventually, American companies got the quality concept and began singing out its praises with the other world-wide believers. They did that, just in time to win back some of their customers from the Japanese. Some of these companies (e.g. Motorola and Federal Express) have even been recognized for their efforts by receiving the prestigious Malcolm Baldrige National Quality Award.

Time-based - Developing a new product rapidly and bringing it to the marketplace ahead of the competition can spell the difference between a company's success or failure. In his book what America Does Right, Robert Waterman describes Proctor & Gamble's plant in Lima, Ohio, which was given the job of manufacturing the company's improved Downy fabric softener. Lima succeeded in overhauling its production equipment so rapidly that new Downy was rolling off the assembly line and into supermarkets in the unbelievable time of only sixteen weeks. The key, according to Waterman, was the plant's empowered work teams that took ownership for the project and held a large stake in its success.

Innovative - Innovative and entrepreneurial are words most of us associate with small or medium-sized companies. yet some of the large corporations - the elephants - have also learned how to run with the gazelles. Through a variety of methods, companies like General electric, Motorola, Federal express, and P&G have proved that they can compete successfully. Unfortunately, too many other U.S. companies are still struggling to find a change process that will make them more competitive.

These are the twelve hallmarks of success that a congress of The American Management Association ( AMACOM) I had attended in the mid nineties in Las Vegas with more than 4,500 of executives from the five continents had discussed and agreed upon. I can see now that we were right in predicting the future traits of the twenty first century needs and demands.

Developmental Alliance: A Case Study

Big organizations that are keen to sustain their growth rate and secure bigger market shares, are nowadays facing serious problems in developing their people at the same rate they grow. managers became so involved in strategic planning, Production, marketing, and sales activities to the extent they do not find time to coach their teams. The impact of this becomes more evident in all the front line jobs that have direct contact with the customers. It becomes worse still in service organizations that build their glory on how they can 'pamper' their customers.

Due to the lack of continuous training and coaching, the sales people find themselves driven by escalating bottom lines and very tight deadlines to cope with organizational expectations of them.

Consequently, sales teams become too result oriented to the extent that they may neglect some of their organizations' business codes and ethics in dealing with their customers. They may rush customer to take a buying decision of the products and/or services without spending enough time identifying their needs, and helping them get what they really need not what the salesperson want them to have. Naturally, a skills and competencies gap between current and expected performance levels exists.

Training departments became unable to close this gap fast enough, nor to cope with the in-house training demands restricted by inflexible deadlines. New methods of training had to be developed in order to satisfy the increasing on-going demand on coaching the field teams. Complementary training activities to the training departments had to be initiated, and new training modules as well. Modules that address marketing and sales people behavior, being both efficient and effective, and consume less time than the traditional classroom training.

Companies like Cisco came up with technological solutions for the problem. Being the biggest networking company in the world with 77 acquisitions since 1999, more than 51,000 employees icluding 16,000 engineers operating in 117 countries with one third of the world population, coordinated coaching for this enormous number of employees becomes almost impossible.

Strategic allaince with an advanced E-training provider becomes a feasible solution, and training provider who can tailor sales interactive coaching models that are built around integrated complementary classroom and distance activities. Experts all over the world can deliver these modules in classes nearer to Cisco operations in 15 different languages, followed by telephone coaching sessions that reinforce the skills and competencies taught in class. Cisco ally in this is Richardson, an American training organization with a customer driven culture that demonstrates the same values and business ethics of Cisco.

A new trend is being developed by these two companies which I believe is going soon to be copied by other organizations, especially that the outcome is measurable.

Performance Assessment: Concepts, Design & Implementation

What is performance management?
Measuring employee performance has come a long way from the annual performance appraisal to an on-going performance management process. In the past, managers and employees met once a year for the annual performance appraisal (review) to look back at the work done during the previous year and to evaluate what was accomplished. Human resources managers, managers/ supervisors and employees have come to realize that only looking back does little to improve performance. In recent years, there has been a shift away from performance appraisals to a more comprehensive approach called performance management.
Performance management is an ongoing process where the manager/supervisor and employee work together to plan, monitor, and review an employee's work objectives or goals and overall contribution to the organization.
Performance management starts with a work plan that identifies for the employee what is to be accomplished and how. The plan is followed up with informal, on-going monitoring and feedback on his/her progress towards the objectives set in the plan. At the end of the performance period - usually a year - the supervisor and employee meet to summarize the accomplishments and challenges of the past year and document the discussion using a performance management form.
What is the purpose of performance management?
The purposes of performance management include

• Organizational Effectiveness


• Ensure that work plans of the employee are directed towards or support the strategic direction of the organization


• Motivate employees to do their best


• Performance Improvement


• Establish clear communication between the manager and the employee about what s/he is expected to accomplish


• Provide on-going, constructive feedback on performance


• Identify areas of poor performance


• Establish plans for improving performance, as necessary


• Identification of Strengths


• Identify the skills and abilities of each employee so that work assignments build on and reflect an employee's strengths


• Identify individual employees for more challenging work


• Training and Development


• Assist and support staff in achieving their work and career goals by identifying training needs and development opportunities


• Administrative Decisions


• Support decision-making about promotions, terminations, compensation and rewards.


• Legal Documentation


• Provide a paper trail for legal challenges related to dismissal or vicarious liability.

2. Is Your Organization Ready for Performance Management?
Organizational Readiness
Before you develop a performance management process, other human resources management practices should be in place to support the process, including:

1. well designed jobs


2. written job descriptions


3. comprehensive orientation


4. effective training


5. effective supervision


6. a positive work environment

If you do not have these human resource management practices in place then the first step for your organization will be to develop them before you establish a performance management process. Without the necessary human resource management practices in place, a performance management process at best will achieve modest improvements in performance and at worst may result in decreases in performance.
The performance management process must have the support of the Board, Executive Director and other senior managers. The establishment of a good performance management process requires time and resources.
Examples of management support for performance management include:

1. giving top performers more challenging/enriching work;


2. making money available for training and other types of development;


3. demonstrating commitment to deal with poor performance.

Management support to act upon the outcomes of the performance management process is also necessary. It is essential that:

1. good performance is recognized


2. inadequate performance results in the necessary support and/or training to improve performance


3. consistently poor performance results in a change of responsibilities or termination, as appropriate.

If your organization will not act upon the outcomes of a performance management process, then there may be little point in establishing the process in the first place.

Organizational Fit
A good performance management system must fit the strategic direction and culture of your organization. Following are guiding principles that are consistently found in effective performance management systems and that you should adapt for your organization:

1. Performance management links the goals of the individual employee to the goals of the organization.


2. The employee and supervisor collaborate to set goals and review performance.


3. Performance management is an on-going process; it is not a once a year appraisal.


4. The performance management process is forward looking; past performance is summarized and future goals are set.


5. The process is based on two-way communication between the employee and supervisor.


6. The process monitors and measures result (what) and behaviour (how). The process does not evaluate personal traits, such as initiative - these are too subjective.


7. The manager provides both positive feedback for a job well done and constructive feedback when improvement is needed.


8. Training and development opportunities are provided for improving performance.

3. Designing a Performance Management System for Your Organization
The design of a performance management system requires you to think about the features that would make performance management effective in your workplace. The goal is to design a performance management process that provides an accurate picture of each employee's accomplishments.
Your performance management system should be:

1. job-related


2. practical


3. have measurable standards

Perhaps the most important design consideration is to develop a process that is practical and easy to understand and use. The focus should be on the results of the performance management process - effective and motivated staff - not the steps of the process.

When developing a new performance management process, use a committee made up of employees and managers. A collaborative approach will increase employee buy-in, understanding and support of the process.

Once the process has been developed, communicate with all staff about the purpose and the steps in the performance management process.
You should be prepared to make adjustments to your new system as necessary.

Different Types of Performance Management Systems
There are a variety of ways to measure performance including:

1. Self Appraisal: the employee is asked to evaluate his/her own work


2. Peer Appraisal: staff of equal rank within the organization are asked to evaluate the employee


3. Team Appraisal: similar to peer appraisals; employees who work as part of a team are asked to evaluate the team's work


4. Assessment Centre: the employee is assessed by professional assessors using several types of evaluation such as work simulations and actual activites


5. 360-Degree or Full Circle Appraisal: the employee's work is reviewed by gathering input from representatives of all the groups the employee interacts with such as supervisor, peers, subordinates and clients.


6. Management-by-Objectives: the employee's achievement of work objectives that are set in collaboration with his/her supervisor are assessed.


7. Combination of Methods: Some organizations combine different methods into their performance management process. In particular some organizations include an evaluation of competencies - the knowledge, skills and abilities that distinguish superior performance. Establishing competencies for performance management in an organization requires careful thought. Without careful preparation, evaluating competencies can be very subjective.

In the voluntary sector, 360-degree appraisals are sometimes used for evaluating the Executive Director. Management-by-objectives is an effective approach to performance management for all other employees.
Because it's the most practical system for most non-profit organizations, we will be focusing in this section of the website on Management-by-Objectives.

Management-by-Objectives
Performance management using a management-by-objectives (results-based) approach has three phases:

Phase 1 - Planning

1. a work plan for the next year is developed;


2. measures for assessing progress are established.

Phase 2 - Monitoring

1. progress toward the goals identified in the work plan is monitored;


2. the plan is adjusted if required;


3. corrective action is taken if necessary.

Phase 3 - Reviewing

1. at the end of the performance management cycle the manager and employee meet to document the work of the past year;


2. accomplishments and shortfalls relative to the work plan are summarized using a performance management form;


3. a new performance management cycle begins.

Each of these phases is discussed in detail in the section below.

4. Doing Performance Management: The Three Phases

If you have just designed a new performance management process for your organization or if you've made changes to an existing process, you will need to hold information sessions with all staff about the new system before implementing it. This will increase employee buy-in into the process and avoid resentment and confusion.

Performance Management - Three Phases

Phase 1 - The Planning Phase
Effective organizations plan their work in advance. Therefore, the first phase in the performance review process is for employees, in collaboration with their managers, to develop work plans for the coming year. The work plan should include:

1. what is to be accomplished - results that are expected


2. how it is to be done


3. measures or standards that will be used

Establishing Performance Objectives and Measures
Often the most difficult part of a planning meeting is finding appropriate and clear language to describe the performance objectives and their measures/ indicators of success.

For example:
What is a valid measure of good customer service?
If the measure used only looks at the number of clients served (i.e. what was done), then the quality of service or 'how well it was done' is not captured. Assessing both 'what' and 'how' would be a more valid measure for good customer service. For example, in addition to the number of clients served, the quality of the information provided, and a complaints rate of 1% or less could represent good customer service.
To assess quality of information provided, the supervisor could do spot checks to listen to or look at the information that the employee provides to clients. The supervisor would then assess accuracy and completeness of the information.

The objectives and the indicators need to be SMART: Specific, Measurable, Attainable, Realistic, Timebound.

1. SpecificThe objectives should specify clearly what is to be done, when it is to be done, who is to accomplish it, and how much is to be accomplished.In addition to "Specific," the 'S' sometimes stands fo "Stretch." This means that the objective is challenging yet doable.


2. MeasurableAsk questions such as: How much? How many? How will I know when it is accomplished?The measures used to evaluate the objectives should be valid - they should actually measure the things you are trying to measure.Multiple measures should be used if possible, for example quantity, quality, timeframe and cost.


3. AttainableAn attainable objective is one for which you see a reasonable path to achievement, and feasible odds that you will get there.


4. RealisticThe objective needs to be possible to achieve. It should match the level of complexity with the employee's experience and capability.There needs to be an assessment that there are not insurmoutable forces outside the control of the employee that will hinder its accomplishment.


5. Time-boundYou should be clear about the timeframe in which performance objectives are to be achieved. Normally, objectives are drafted to be completed by the end of the performance review period (usually one year).

Writing objectives and identifying the appropriate measures takes careful consideration.
One format to use for writing objectives is:

1. Action verb + Object of the action verb + Measures


2. Write an objective for each accomplishment; don't put multiple elements in one objective


3. Use positive terms for behavioral objectives rather than stating the objective as what should be avoided

For some objectives, identifying appropriate measures can be challenging.

For Example:
For an employee who is responsible for supervising volunteers at a drop-in centre for youth.
SMART Objective 1: Conduct monitoring visits to the drop-in centre on a monthly basis to assess the performance of the five volunteers against the plans and objectives that were developed with them.
SMART Objective 2: Provide written updates on the work of the volunteers to the Program Manager on a quarterly basis.
Not SMART: Visit the drop-in centre and see how the volunteers are doing.
(image placeholder)

Make sure that the objectives are a good representation of the full range of duties carried out by the employee, especially those everyday tasks that can take time but are often overlooked as significant accomplishments. If it does not cover the most important duties then the resulting evaluation will not be valid. Consider identifying critical objectives. These are objectives that are critical to the overall success of the position. If the employee does not meet his/her critical objectives then overall performance will be evaluated as unsatisfactory. The employee should have a written copy of the performance objectives and the measures/standards that will be used to assess performance.

CHECKLIST: The Planning Phase

1. Set up a meeting to discuss the work plan. Make sure to set aside sufficient time and arrange to not be interrupted


2. Explain the purpose of performance planning, the purpose of the meeting and how you propose to proceed


3. Review the organization's goals and objectives and the strategic plan (if it exists)


4. Look at the employee's existing job description to determine if it's still accurate and reflects the reality of the employee's job. Discuss and make changes as required.


5. Review the employee's work plan for the year and assess the linkages between it and the organization's goals and objectives and the strategic plan.


6. From the work plan or the job description, jointly identify 3-5 areas in which you will set performance objectives for the year. The choice of areas may be determined by the organization's strategic plan, by the employee's desire to improve outcomes in a certain part of their job or by a need to emphasize a particular part of the job at this time.


7. Prepare a draft of the performance objectives and come to agreement as to the what success for each performance objective will look like (performance indicators)


8. Identify learning objectives that will help the employee grow in their skills, knowledge and competencies. These objectives can help the employee accomplish their work goals or can be part of a longer term plan to develop their careers.


9. Discuss the supports available for their learning objectives. These could include courses, workshops or other forms of training but it can also include in-house resources such as coaching or mentoring. For more training and development ideas,


10. Ask the employee if s/he sees any barriers to accomplishing these objectives or their day to day work and, if so, what needs to be done to overcome them.


11. Ask the employee to finalize the performance objectives and the indicators as well as the learning objectives in a form provided and make an appointment for a follow up meeting to sign off on the plan.

Phase 2 - Monitoring Phase
For a performance management process to be effective, progress must be continuously monitored. Monitoring means that:

1. progress towards the objectives set in the workplan is assessed frequently;


2. feedback on progress relative to the goals is given to the employee; and


3. adjustments are made as necessary.

When providing feedback on performance remember to provide both positive feedback in addition to any negative feedback that is necessary. Expert opinion is that there should be four or five positive comments for every negative comment.


CHECKLIST: The Monitoring Phase

1. Meet two to three times per year to review the plan and assess progress in meeting the performance objectives


2. Identify any changes that may be required to the plan. Changes may be required for several reasons. For example, there could be a shift in organization priorities or the employee is required to take on unforeseen duties.


3. If serious performance problems are occurring, they need to be discussed in the context of these monitoring sessions and corrective action needs to be taken (see Conducting a Constructive Feedback Session below).


4. Determine if any extra support is required from the supervisor or others to assist the employee in achieving the objectives.


5. Keep track of the accomplishments and progress by writing them down on the performance management form.

Conducting a Constructive Feedback Session
If an employee is not performing up to the standards set, you will need to conduct a constructive feedback session. It's important to conduct this session before any performance problems get out of hand. It can also demonstrate due diligence if the incident persists and disciplinary action is taken.

• Prepare for the meeting


• Confirm the facts of the performance issue - make sure you know what happened and how the employee might have perceived the situation. Be clear about what you see is the problem and think through what you want to say. Be clear about the consequences if the employee's behavior does not improve.


• Arrange to hold the discussion in a location where there will be privacy and no interruptions.


• If you are emotionally upset about the problem, allow yourself time to calm down. Try to appproach the discussion objectively and impersonally.
  


• Set the climate


• Establish a positive and co-operative environment by using a non-threatening, matter-of-fact tone.
  


• State the facts


• Describe the unacceptable performance in an objective, factual, nonjudgemental way, citing specific examples of the behavior in question.


• Identify the negative impact on you or on others in the workplace.
  


• Listen


• Have the employee describe the situation as they see it and provide an explanation.


• Be open to any new insights on the problem coming from the employee.
  


• Obtain the employee's agreement that a problem exists


• Respond to denial, blaming of others, etc. by restating factual information and reviewing the negative impacts of the unacceptable behavior.
  


• Agree on an action plan


• Ask the employee for their suggestions for solving the problem.


• Offer your suggestions if necessary.


• Agree on a specific plan of action: have the employee tell you what they plan to do, how they plan to do it, and within what time period.


• Document the action plan.


• Specify the consequences for the employee if the problem is not corrected.
  


• Follow up


• Monitor results and meet on a periodic or regular basis to discuss progress.


• Provide positive reinforcement of any improvement and continue to offer your help and support.


• If the behavior has not changed over the specified time period, enact the consequences as discussed in the action plan.

Phase 3 - The Review Phase
At the end of the performance management period, usually one year, the employee and the manager sit down to:

1. summarize the work accomplished during the previous year relative to the goals that were set at the beginning of the performance period;


2. document challenges encoutered during the year; and,


3. identify areas for training and/or development

CHECKLIST: Performance Review Phase

1. Review the purpose and process of a final meeting.


2. Capture the key results, both accomplishments and shortfalls, for each performance objective and each learning objective.


3. Let the employee take the lead - ask for his/her assessment of their performance during the review period. The supervisor should do the same and any differences in assessment should be compared and discussed. Make sure the employee has an opportunity to respond to the supervisor's comments.


4. Do not invent areas for improvement and do not deviate from the agreed-upon objectives. If the employee has done an excellent job all year, digging for something to identify as an area of improvement will only lead to demotivation.


5. Identify and discuss any unforeseen barriers to the achievement of the performance and learning objectives.


6. The employee and the supervisor should sign off on the form. This acknowledges involvement in the process, but not necessarily agreement by employee with the content of the evaluation.


7. Ensure that the employee receives a copy of the evaluation and the document is put in the employee's file.


8. Both the supervisor and employee should prepare for the next cycle of performance management.

Some organizations do not allow a manager/supervisor to document anything negative in a performance management review if it has not already been discussed with the employee. This is done to ensure that managers deal with performance problems when they arise and that there are no surprises during the performance review meeting. Review your new performance management process after the first year and make adjustments if necessary.

5. Training Your Organization's Raters

For a performance management process to succeed in motivating staff to do their best it must be fairly and consistently applied to all staff.
Managers/supervisors must be trained on:

1. the overall performance management process


2. how to work with employees to set goals and standards


3. how to provide constructive feedback


4. how to conduct a performance management review


5. the sources of rater bias

Well trained raters will help ensure that the performance management system is reliable, that is, the results of the process are accurate measures of performance and the raters are consistent over time.

Common Sources of Rater Errors or Bias
Supervisors/managers should be aware of the potential sources of errors when rating performance and make every effort remove these potential sources of error from the evaluation process:

1. HaloThe supervisor's positive opinion of the employee in one area affects the performance ratings in all areas. This is particularly a problem when supervisor are rating employees whom they consider to be friends.


2. HornsThe supervisor's negative opinion in one area affects the performance rating of all areas.


3. Central TendencyThe rater is uncomfortable with evaluating an employee's work to be at either end of a rating scale such as "Exceeded Expectations" or "Did Not Meet Expectations". Instead the rater consistently rates employees in the middle of any scale.


4. Leniency or StrictnessThe rater is either too easy or too harsh when rating performance.


5. RecencyThe rater focuses on performance for the recent past and does not look at performance for the entire evaluation period.


6. Same-As-MeThe rater rates employees who are perceived to be similar to the rater more favorably than employees who are dissimilar.If this tendency is based on grounds for discrimination under Human Rights Legislation (for example race, gender, nationality), it is a violation of Human Rights and is illegal.


7. ContrastThe rater evaluates an employee against another employee that was rated just before the current performance review meeting.

6. Designing an Appeal Process
Even with a well designed and implemented performance management process, there may be situations when an employee has a serious difference of opinion with the manager about his or her performance assessment. A procedure for the employee to discuss disagreement with the process should be established.
Some options for dealing with disagreements about performance appraisals are:

1. Step Review SystemThe disagreement is heard by higher levels of management such as the supervisor's manager, followed by the Executive Director as necessary. In small non-profit organizations there may not be higher levels of management to appeal to.


2. Peer Review SystemA small group made up of equal numbers of employees and management staff review disagreements.


3. OmbudsmanEmployees can seek assistance from an individual within the organization who is designated as an impartial ombudsman. An ombudsman does not have the authority to override a decision, but the ombudsman can refer the disagreement up the line of authority, if necessary.

7. Final Checklist for Your Performance Management System
As stated previously, performance management has a variety of purposes, one of which is documentation should there be a legal challenge related to performance.
To ensure that your performance management process is defensible:

1. Base the process on well written job descriptions and job-related activities


2. Have the manager and employee collaborate on setting performance objectives


3. Establish results (objectives) and behaviours for which you can develop observable measures; avoid traits such as 'initiative' which require subjective assessments


4. Ensure that the employee keeps a copy of the performance plan (work plan) and expectations set at the beginning of the performance management cycle


5. Provide ongoing monitoring and feedback on performance to the employee


6. When problems are identified with performance, provide support (training, coaching, etc.) and adequate time for the performance to improve


7. Train managers/supervisors on all aspects of the process and on how to make bias free assessments


8. Ensure that the performance management form accurately documents performance - if overall performance is poor say so


9. Periodically review the performance management process to ensure that it is being applied consistently


10. Establish an appeals process

Performance Assessment systems design and emplementation, to my opiniion, is a cultural issue. It can neither be developed nor managed in isolation of the business values of the organization. It reflects both the business philosophy and attitude towards people who work for the organization.

Assessing And Testing Training Effectiveness

There is no question about it. Training and development is gaining attention in Corporate America. The industry is growing and changing to achieve a variety of goals, from satisfying immediate employment skills shortages to meeting organizations' long-term strategic needs. According to a survey conducted by Chief Learning Officer magazine and Fairfield Research Inc., enterprise firms in the United States spend, on average, $3.7 million every year on learning and training. Total spending on corporate learning by enterprise companies is forecast to increase to $11.8 billion—a projected 4.3 percent increase in 2003.

Although many CEOs value training because they believe it strengthens the organization and serves as a retention tool, not many are clear on how to measure the return on the investment (ROI). With increased pressure to justify expenses, CLOs are looking for ways to show improved bottom-line results.
"We are seeing more and more CLOs link the development of a training program to the strategic direction of the company," said Linda Gookin, senior consultant at the Hay Group, a professional services firm that helps companies worldwide develop their employees. "To maximize the effectiveness of a training program, an organization needs to use ongoing assessment to establish learning outcomes, link them to a performance plan, define measures and finally evaluate learning—and this must be an integral part of the corporate strategic plan."

There is a huge gap between the learning programs that produce results and many of those being implemented today. Certainly, there are many reasons this gap exists, including failure to link training to core business strategies, uncertain business and economic conditions, lack of acknowledgement or reward for training accomplishments and failure to make training an integral part of an employee's job. These and many other factors can hinder the development of a learning program that produces results.

However, one of the main reasons CLOs have a difficult time proving the value of a corporate training program is that testing and assessment are not fully integrated into the program. All too often, testing and assessment are viewed as separate from the learning process and as afterthoughts to the development and implementation of the learning program. But without ongoing integration of testing and assessment into a learning program, there is no reliable way to know how much learning has taken place, if any at all. A renewed focus on testing and assessment is necessary to improve the quality of instruction, the effectiveness of the curriculum, and the validity of the outcomes.

When testing and assessment are held completely tangential to learning, the entire organization is affected by the negative impact on the learning process, the learning outcomes and the ability to measure ROI. Only when we hold learners and the learning process accountable to themselves will we see verifiable proof that learning has taken place. When you are able to fully integrate testing and assessment into the development, management and evaluation of your organization's learning system, you will be able to spend your training dollars knowing—not hoping, not guessing, not assuming, but knowing—that you are getting something in return.

Certainly, an organization's advertising team would not set aside money for a print ad campaign without knowing something about the publications in which the advertisements will appear. The team would want to know about the audience that reads the publication. Creative ideas would be tested using a variety of techniques such as focus groups, image studies and positioning research. Copytesting would be done to diagnose the effectiveness of the proposed ad. All of this would take place before the publication hits the newsstand. Once the advertisement is printed, market-tracking evaluations would be conducted to assess the impact on sales. Changes in customer attitudes and behaviors would be measured. The advertising team wouldn't dream of ignoring this information because it understands the value and usefulness in determining how to allocate resources.

Imagine that you have been asked to implement a new enterprise-wide training program to ensure that each employee masters a new skill and can successfully demonstrate competency within a month. Maybe you have five employees, maybe you have 50,000, but the idea is that all employees have to master the skill. Would you ignore data that told you which employees knew the information already? What about data that told you how your employees learned most efficiently? How about data that told you what to change about your current learning programs to make them more effective? Of course you wouldn't, you would welcome this information with open arms. Without this information, your training program will never achieve its full value.

No organization can afford to take a hit-or-miss approach to training. And no organization can afford training that doesn't pay off for the business.
Oracle Corp., the world's largest enterprise software company, was searching for a way to enhance the reach of its certification program and increase the value of the curriculum offered at its 125 Oracle University Training Centers located around the world. Oracle sought to analyze options and develop a customized, technology-enabled testing solution.

"We were able to more broadly link our certification training with Internet-based testing solutions to measure the impact of the training and to expand the value and reach of our certification programs," said John Hall, senior vice president, Oracle University. "We wanted to maximize the learning experience for Oracle candidates, and in order to qualify and quantify the effectiveness of a learning strategy, effective assessment must be in place."

Because of the implementation of the new testing solution, Oracle University's learning system has unparalleled efficiency and scalability. Assessment results are instantly available to the instructor and give the learner immediate feedback, verifying knowledge and competency levels or pinpointing additional training and development needs.

Testing and assessment are keys to providing the information needed to build and sustain learning initiatives. Testing and assessment are absolutely integral to the learning process—just as content development, instructional design and methods of delivery are integral. The proper use of testing and assessment vehicles—prior to learning, throughout learning and after learning takes place—will give you the means to provide standards of consistency, achieve accountability and ensure that your organization gains value from training investments.

Well-designed and well-integrated testing and assessment strategies provide very real benefits to the learner, the instructor and the sponsoring organization. Training empowers workers. Testing and assessment empower training. It is a fundamental law of learning: People want to know that they have accomplished a task, that they have achieved the objective of the training. Every person needs to know what is expected of him, what abilities are needed to be successful on the job. And employees must know that they will be held accountable to these expectations. Good tests, based on consistent standards, provide one objective measurement of the skills and knowledge of the individuals who take them. Employees can return to their jobs with the added skills, increased morale and the knowledge that their employers value them enough to invest in their development.

An integrated assessment program also provides insight and development goals for the instructor and course design. Assessment is a diagnostic tool that ultimately helps the learners confirm what they have learned and helps the instructor plan for future learning or remediation. A well-built test is a quick and objective way to identify the strengths and weaknesses of the delivery of the learning program.

Some of the most profound benefits integrated testing and assessment programs can provide are to the organization. Think about the four levels of evaluation: participant reaction, participant learning, behavior change and impact on the business. By incorporating these systematic evaluations consistently into a training program, you can prove that learning within the program has a significant impact on the driving concerns of the business—revenue, profits, employee retention, market share and, ultimately, customer satisfaction. Testing and assessment as part of the learning process is efficient and reliable and provides immediate results.

You may argue that you do not have the time, money or incentive to implement an integrated testing and assessment program into your learning system. If you take training seriously, you need to take the evaluation of training seriously by asking whether the training works. If you want employees to walk away from a training program with actual job skills that can translate to benefits for the employee and the organization—not just a certificate and a fancy binder—you need to provide proof of effectiveness.

It is time to require staff and vendors to embed testing and assessment into each curriculum and learning opportunity. You should be asking your e-learning providers how they do this, and you should be evaluating them based on their answer. It is time to encourage employees to embrace testing and assessment as a tool that promotes and demonstrates continued learning and performance improvement.

So, where do you begin? It is important to remember that an assessment instrument is most effective when used as part of the total training system, but it is likely to be very counterproductive when used inappropriately. Often inappropriate use comes from not having a clear understanding of what is being measured and why. You can begin integrating testing and assessment into your learning programs by identifying what it is you want to accomplish with the assessment program in order to select the appropriate tools to achieve your mission. Just as you wouldn't use a knife to eat tomato soup, you would find a certification test quite useless in measuring the effectiveness of the instructor. It is absolutely critical to have a clear understanding of what needs to be measured and for what purpose.

Sun Microsystems Inc., a leading provider of hardware, software and services for network computing solutions, has also developed a worldwide corporate learning system. In July 2000, Sun began the implementation of Sun Sigma, the company's adaptation of a worldwide business phenomenon called Six Sigma—a comprehensive program for building and sustaining business performance, success and leadership. The company used the Sun Enterprise Learning Platform to manage the training of 39,000 globally dispersed employees on Sun Sigma concepts.

To date, more than 24,000 employees have been trained on the fundamentals of Sun Sigma. More than 1,000 executives have been trained as Sun Sigma "Champions" through online learning and classroom experiences. And more than 100 employees are Sun Sigma "Black Belts," signifying the highest level of leading Sun Sigma projects.

To effectively deploy a global learning program for thousands of employees, the company needed to integrate testing and assessment tools throughout the learning process. Program coordinators began by identifying the desired skills for a successful outcome and then identified where the gaps needed to be filled. They measured the performance of employees as they completed learning segments. They rigorously tracked results of on-the-job improvements through verifiable cost reduction, product improvement and customer satisfaction.

"In today's corporate world, most learning takes place outside of a managed learning environment, and the ROI for learning is universally overlooked," said Mike Wenger, senior director, Center for Learning Innovation and Effectiveness at Sun Microsystems. "Companies need to design an overall plan for bringing learning systems into the corporate vision. Testing and assessment is a key component to building accountability into the system. Organizations need a clearly developed assessment strategy with measured results to achieve this desired accountability."

How effectively organizations can measure the results of their training objectives has caught the attention of the financial community. What a company knows—what its employees know—and what those employees do with that knowledge has real value. Yes, knowledge is intangible, but much of today's corporate value is associated with intangible factors. The more effectively you can measure and prove knowledge, the more likely you can turn learning into a tangible corporate benefit.

Consider this: A four-year study by the American Society for Training and Development (ASTD) shows that firms that invest $1,500 per employee in training compared to those that spend $125 experience on average 24 percent higher gross profit margins and 218 percent higher income per employee.

In today's economy, all expenses require justification. You are faced with a daunting challenge. You need to implement a learning program that will successfully educate employees on key objectives, provide course designers and facilitators with timely feedback to improve quality and offer senior management bottom-line justification. Furthermore, you must implement twice as many programs with half as many resources as you had last year. It seems an insurmountable task. Consider that the complete integration of testing and assessment tools and programs can give you the data and feedback you need to prove not only that your program is meeting its objectives of training employees effectively, but also that the organization is receiving some real, tangible benefits because of its existence.

Optimizing The Value of The Human Side of Organizations: The FACES Model

Introduction
Managing human capital in an environment characterized by down-sizing, right-sizing, reengineering, technological innovation, and global competition is increasingly challenging for organizations. An effective strategy for managing the internal attributes of an organization must rely heavily on the capabilities of people to provide a competitive edge. Barney (1995) describes four internal attributes important to an organization’s ability to develop, manage and deliver products and services: physical, financial, organizational, and human. Of these, the human element is the cornerstone of the internal resources of an organization, and effective management of this element can make or break a business or other entity.

Enhancing the effectiveness of people in organizations requires consideration of a number of factors. The purpose of this article is to summarize relevant recent literature related to these dimensions, and present a conceptual model for effective management of the human element of the organization. The dimensions are summarized into five categories: fit, attitudes, compensation, empowerment, and selection (FACES). Components of the FACES model are:

1. Fit - matching an employee’s attributes to an appropriate employment climate, often

known as person-organization fit.
2. Attitudes - recognizing the importance of employee attitudes and satisfaction with the employment environment.
3 Compensation - considerations of effective compensation and performance management systems.
4. Empowerment - elements of employee success, development and wellness.
5. Selection - effective methods for selecting appropriate employees.

Fit
Matching people with appropriate organizations has a number of positive benefits. Perhaps the most important effects derived from matching individuals to the organization’s environment were determined through a study by Bretz and Judge (1994). Their study found that person-organization fit accounted for statistically significant increases in both tenure (up to 11 percent of the variance) and job satisfaction (up to 32 percent of the variance).

Rynes and Gerhart (1990) found that interviewers rate applicants differently on general versus firm-specific criteria. Interrater reliability was higher for firm-specific criteria than for general employability criteria, suggesting that interviewers in the same organization share common ideas about applicant-organization fit. This research was confirmed by Adkins, Russell and Werbel (1994), who also found that recruiters perceptions of person-organization fit are distinct from those of general employability. Adkins, et al. (1994) noted that higher person-organization fit ratings were associated with similarities in work values between recruiter and applicant.
Barrett (1995) examined person-environment congruence as measured by the Performance Priority Survey (PPS). This survey requires supervisors and subordinates to indicate priorities for behaviors important to the subordinate’s job. Correlations between scale values are assigned to assess the degree of congruence between supervisor and subordinate scores in two areas: applicant-supervisor pairs and applicant-organization congruence.

The author hypothesized that significant agreement between subordinate and supervisor would predict the supervisor’s satisfaction with the employee. Also, “high agreement between the applicant and organizational climate would lead to the prediction that the applicant would fit the organization” (p.658).

Barrett (1995) analyzed three studies which utilized the PPS to determine correlations of agreement scores and applicant-supervisor and applicant-organization fit. Analysis of the agreement ratings through various jobs and organizations revealed a moderate positive correlation between agreement scores and supervisor ratings of subordinates, and to a lesser degree subordinates’ rankings of supervisors.

Correlations between agreement scores of subordinates with averaged supervisor scores, postulated to be representative of organizational climate, indicated that agreement scores correlated with supervisor performance ratings. This correlation showed predictive validity for organizations with which the employee had no prior contact and for organizations with which the employee was familiar.

Employers should note that recruiters apparently distinguish between general employability of an applicant and an applicant’s suitability for a particular organizational environment. Given the associations between person-organization fit and tenure and satisfaction, employers should consider congruence between applicant and organization.

Attitudes
A recent survey by Hewitt Associates, LLC, found that, of 46,500 employees from 38 companies, 74 percent reported general satisfaction with their work, (“How satisfied”, 1997). The work itself and people/coworkers received the highest satisfaction ratings, with advancement opportunities, recognition and pay issues ranked the lowest.
Issues related to employee attitudes and satisfaction are important to the assessment of how human resources management and planning contribute to performance objectives (Morris, 1995). Morris (1995) recognizes seven elements related to employee satisfaction.

1. The job itself - including content, variety, training.
2. Supervisor relationships - related to respect, recognition, feedback and fairness in evaluation.
3. Management beliefs - related to trust, information sharing, and valuing employees.
4. Opportunity - for career advancement and job security.
5. Work environment - physical facilities, availability of resources.
6. Pay, benefits, rewards - compensation and rewards.
7. Co-worker relationships - cooperation, teamwork, communications.

These categories are evidenced in the Hewitt Associates survey results. Lieber (1998)summarizes the components needed for high levels of satisfaction into only three categories: inspiring leadership, great facilities, and a sense of purpose for employees.
Chase (1996) claims that even reengineering, done properly, can result in improvement in employee attitudes and satisfaction. Chase (1996) indicates that reengineering efforts related to processes benefit from employee input, and that input can be encouraged in a non-threatening (e.g. no job reductions) manner.

Further, involvement of people in studying processes can result in increased levels of trust.
Discussion of person-environment fit indicated possible connections between a match between employee and organization and job satisfaction. This relationship was explored by research conducted by Sims and Kroeck (1994)in terms of the ethical climate of a firm. They found that employees choose to work for companies that have ethical climates similar to that expressed by their preferences, that this similarity was negatively associated with turnover intentions, and that similarity increased organizational commitment. The relationship between ethical climate and job satisfaction was not statistically significant. However, both organizational commitment and negative turnover intentions imply some degree of satisfaction.

A study of the impact of leadership styles on employee attitudes was conducted by Savery (1993). This research investigated the connection between closeness of fit between perceived and desired leadership styles and job satisfaction. Additionally, it was hypothesized that perceived democratic leadership would have a positive impact on job satisfaction. This study confirmed that smaller differences (or dissonance) between perceived and desired leadership styles correlated with greater job satisfaction. However, perceptions of democratic leadership style did not necessarily lead to increased job satisfaction. In sum, the actual leadership style is less important to job satisfaction than the congruence between perceived and preferred styles (Savery, 1993).

The practical upshot of job satisfaction and positive employee attitudes is that in addition to the benefits realized by employees, organizations benefit from higher perceptions of customer service. Schmit & Allscheid (1995) simultaneously studied samples of both employee attitudes and the company’s customers’ perceptions of quality service. The results indicated that there was a relationship between positive employee attitudes and perceptions of customer service.

Compensation
Although workers generally report that having an interesting and meaningful job is the main key to job satisfaction, good compensation and rewards systems and meaningful performance management processes can enhance employer-employee relationships. Accordingly, inequitable or ineffective systems can result in reduced levels of satisfaction.
Compensation and Rewards.

Compensation is affected by both external and internal factors (Sherman & Bohlander, 1992). External factors include labor market conditions, local wage rates, collective bargaining efforts and governmental regulation. Internal factors include the employer’s ability to pay, worth of the job, and the value of an employee’s relative contribution. Also important to compensation systems are fringe benefits. Fringe benefits often add 25 to 30 percent to compensation costs, over and above base salaries (Penson, 1995).

Compensation plans traditionally have been formal plans rooted in job hierarchy and individual performance, controlled by a bureaucratic human resources function. Recent trends indicate a shift, to more flexible models focusing on team and organizational performance, with control of compensation decisions fixed more with line managers and even workers (Risher, 1997). Risher (1997) notes that the structure of organizations is becoming more team oriented, resulting in the need to compensate individuals to some extent based upon their contributions to achieving team and organizational goals.

Compensation systems have not kept pace with organizational structures that utilize more work teams. In a recent survey, 87 percent of responding companies reported use of work teams, but only 41 percent offered some form of team-based compensation (“Paying for teamwork”, 1997). While few advocate dropping all considerations of individual employee performance in compensation decisions, the importance of team achievements should not be overlooked. It is also important to assure that emphasis on team performance is not undermined by the rewards system. For example, it would be difficult to focus employee efforts on team achievements if a piece-work incentive is in place (“Paying for teamwork”, 1997).

As reengineering efforts have revised work processes, organization structure has become flatter and more work teams are utilized (Flynn, 1996). Compensation and rewards systems need to be reviewed in light of these developments. Broadbanding is an attempt to increase flexibility in compensation plans in order to deal with compensation issues based upon team and productivity issues. Broadbanding is an infrastructure concept which allows compensation schemes to incorporate elements other than pay grades or ranges in determining pay and bonuses (Schuster & Zingheim, 1996). Essentially, broadbanding allows pay ranges to vary more so that compensation can include incentives other than those related strictly to individual performance. Advantages include reducing the hierarchical pay grade focus, providing more flexibility in determining employee rewards, and giving managers more power and latitude in compensation-related decisions (Flynn, 1996).

Contributions to productivity by individuals and teams are recognized through gainsharing (Jackson & Roper, 1996). Gainsharing provides compensation based on operational, financial or team performance (Masternak, 1997). Masternak (1997) studied 17 facilities involved in gainsharing plans. He suggests several elements that contribute to an effective gainsharing plan:

1. Each organization should customize gainsharing plans according to the nature of individual plants, locations, or business units.

2. Structured employee participation is necessary, particularly in developing fair and achievable performance baselines and goals.
3. Regular communication of performance goals and gainsharing results.
4. Provide individual, team and organizational recognition to promote the gainsharing plan and maintain employee focus.
5. Support the gainsharing plan by providing employees the resources for success, including training.
6. Payments related to productivity should become significant over time, and distributed frequently in order to sustain momentum.
7. Maintain organization-wide commitment to the plan.

Changes in the nature of relationships between suppliers and customers have provided the basis for other trends in compensation, especially in sales. Many customers have shifted their purchasing strategy from one of low initial cost to one that considers the total value (including quality and service issues in addition to costs) of the product to the customer (O’Connell & Marchese, 1995).

This trend has resulted in many firms reducing their number of supplier relationships drastically, which has resulted in pressures to reward salespersons appropriately for retaining customers, not just acquiring new business. This has led firms to develop life cycle compensation systems to help retain sales representatives (and their established client bases) throughout their entire careers. These new plans include awarding bonuses for accounts retained and contracts renewed, and recurring payments in consideration of multi-year sales results.
Another recent trend involves increased flexibility in employee benefit choices and administration. Owens-Corning, for example, has reduced the fixed level of guaranteed benefits in favor of employee credits. These credits can be used to purchase traditional fringe benefits, as well as other rewards such as time off or even additional money (McCafferty, 1996).

Performance Management
In order for employees to be accountable and rewarded for performance it is necessary to develop individual and team performance objectives, determine reward structures, and provide clear feedback of performance results (Jones, 1996). According to Sherman and Bohlander (1992), a performance management system has four objectives:

1.To allow employees to discuss performance issues and standards with supervisors on a regular basis.
2.To allow supervisors to analyze the strengths and weaknesses of employee performance.
3.To provide a mechanism for developing individual performance improvement programs.
4.To provide a basis for compensation decisions.
Additionally, regular performance appraisal serves as a means of documenting performance which can serve as a basis for disciplinary decisions, thereby providing notice to employees as part of due process. One positive result of good performance measurement is that it can provide insight into training needs to support an organizational development plan.
The predominant trends in compensation, rewards and performance management relate to individual and team incentives. Many organizations have flatter structures due to reduction in organizational layers and other elements of bureaucracy (Flynn, 1996). Compensation based upon individual, team, and organizational performance is gaining acceptance. Managers have assumed more responsibility for compensation administration and pay decisions (Flynn, 1996). Elements of employee responsibility for the success or failure of their employers is becoming a focus of compensation, rewards and performance management.

Empowerment
Recent trends toward flatter organizational structures and use of work teams have resulted in increased pressures on employees in terms of both performance and decision making. In order to succeed in this environment, employees must have the knowledge and resources, and organizations must empower employees through training, development and concern for their wellness.

Training
Training is a particularly important component of the development and learning process. Nadler and Nadler (1994) have developed the Critical Events Model (CEM), an open systems model designed for the systematic implementation of training and learning programs. Implementation of the CEM is a sequential process which includes the following components:

1.Identifying the needs of the organization. This involves discussions with managers and other diagnostic efforts to determine the goals and objectives of the training. The diagnosis is followed by evaluation and feedback.
2.Specify job performance. Discussions with first line supervisors and employees helps determine job performance in terms of quality and quantity.
3.Identify learner needs. This involves analysis of the gap in knowledge, skills or abilities to be addresses by the training in order to achieve the desired level of performance.
4.Determine objectives. The specific measurable objectives are derived from analysis up to this point in the process.
5.Build curriculum and select instructional strategies. This involves determining the content of the training and the methods of delivery. Choices for delivery techniques include general to specific, specific to general, and concrete to abstract concept techniques.
6.Obtain instructional resources. This includes development of reference materials, physical space and scheduling considerations.
7.Conduct the training. An opening meeting is conducted, reference materials are distributed, and the training schedule is begun.
8.Evaluation and feedback. Both during training, to correct for any weaknesses determined in the process, and at the conclusion of training, to determine its effectiveness.
Organizational Development.

In addition to training efforts, which generally provide process-related instruction, organizational development interventions are used to improve the social functioning of organizations, using behavioral science techniques applied to organizational processes. They focus on interactions among people within organization, with the goal of increasing organizational effectiveness and health (Hodge, et al., 1996).
Organizational development can target both the structural and process dimensions of an organization (Theodore, 1996). The support for planned organizational change must come from top management, but in order to be effective, change has to affect all employees involved. The components of organizational development may include gathering information from workers and providing feedback, study of organizational processes, team building, and various types of training (Hodge, et al., 1996).

Neuman, Edwards and Raju (1989) conducted a meta-analysis of organizational development interventions to determine their effects on satisfaction and attitudes. This analysis divided organizational development interventions into three categories: human processes, techno-structural, and multi-faceted interventions.
Human processes organizational development interventions include laboratory training, participation in decision making, goal setting, team building, grid OD, survey feedback techniques, and management by objectives. Techno-structural interventions include job redesign, job enlargement, job enrichment, and flextime. Multi-faceted interventions use combinations of intervention techniques.

Multi-faceted interventions proved to have greater impact in modifying satisfaction and attitudes than any single technique. Of the individual interventions, team building and lab training had the greatest impact on changing attitudes and satisfaction. Overall, the authors concluded that organizational development appears to affect attitudes more than satisfaction (Neuman, et al., 1989).

Management development is another key element of the empowerment and development process. The development of management competencies required for implementing strategic change and enhancing the understanding of competition is the focus of Holistic management (Wilson, 1994). According to Wilson (1994), this is accomplished by emphasizing “functional relationships between the organization’s parts and the whole” (p. 12).

Holistic management involves both quality systems and human resources; both the way individuals work and the way they are trained (Hoare, 1995). Successful implementation of strategies through the holistic approach requires a shared vision communicated throughout the organization, communicated through a strategic plan which has been endorsed by top management (Wilson, 1994).

Employee Health and Wellness
The American Institute of Stress estimates that illnesses related to stress cost the American economy $150 billion per year in terms of lost productivity and health costs (Minter, 1991). A recent survey by Harris Research found that of 5,400 adults in 16 countries, 54 percent reported that the leading cause of stress was work (Romano, 1995). Job and career path uncertainty is the top cause of workplace stress, but other factors such as poor communications and perceptions of workload inequity contribute as well (Minter, 1991).

Holmes and Rahe (1967) defined “stress” or “stressor” as any environmental, social, or internal demand which requires the individual to readjust his or her usual behavior patterns. Stressors related to organizations include factors intrinsic to the job, organizational structure and control, reward systems, and leader relationships (Ivancevich & Matteson, 1987).

Research over the past few decades has linked personality to stress-related illnesses, especially coronary heart disease. The “Type A” behaviors associated with susceptibility to stress-related illnesses include hard-driving, competitive, aggressive, hostile, and time-urgent behaviors (Ivancevich & Matteson, 1987).

Addressing the problems of workplace stress, including those exacerbated by Type A personality factors requires a concerted effort. Dewe (1994) suggests that many stress interventions fail because they offer only a partial solution or place the burden for change on the individual. Dewe (1994) suggests a three-level approach to the problem:

1. Primary interventions - reduce organizational-level stressors such as poor communications, role ambiguity, poor leader relationships, and red tape.
2. Secondary interventions - equip individuals to better cope with stress through relaxation training, meditation, biofeedback, cognitive restructuring, and exercise.
3. Tertiary interventions - assist individuals who have stress-related illnesses through Employee Assistance Programs and wellness programs.
Maintaining the health and well-being of employees is critical to productivity and employee satisfaction. Given the costs associated with this problem, both in terms of financial and human capital, employers must be pro-active in dealing with these issues.

Selection
Managing human capital involves a great deal of emphasis on selecting the right employees for the organization and for specific jobs. Effective employee selection is important, as the cost of replacing an employee is estimated by the U.S. Department of Labor to cost an employer one-third of an employee’s salary to acquire a replacement (White, 1995). Employee selection methods include employment interviews, assessment centers, realistic job previews, and the use of a variety of test instruments.

Employment interviews are the most widely used method of assessment, but their reliability is suspect, as they rarely show correlations with performance greater than .20 (Lane, 1992). However, Pulakos and Schmidt (1995) found that experience-based interviews derived from thorough job analysis found correlations with supervisory ratings as high as .32, indicating that this type interview can be a good predictor of performance.

Assessment centers utilize a variety of methods to judge performance, including in-basket exercises, leaderless group sessions, often complemented by cognitive ability and personality tests. According to Dulewicz (1991), assessment centers are the best predictors of future performance of all generally researched assessment tools, and can provide correlations with performance as high as .43 (Lane, 1992). Although considered rather costly, assessment centers have the advantage of showing little adverse impact on any protected group (Lane, 1992). Determining key competencies through job analysis and thorough training of assessors improves the validity of assessment center ratings (Dulewicz, 1991).

Realistic job previews are used by organizations to provide potential employees a balanced picture of the positive and negative aspects of the jobs they are seeking. The use of realistic job previews has been demonstrated to have a positive impact on job satisfaction and to be negatively correlated with turnover (Collari & Stumpf, 1995).

One author estimates that 5,000 to 6,000 employers use personality tests as part of their hiring processes (O’Meara, 1994). Research suggests that personality tests can be better predictors of job performance if the factors that comprise effective performance in a specific job are clearly understood, and even then, should be used to complement other methods and not as a stand-alone selection tool (Adler, 1994).

Barrick and Mount (1991) classified results from 117 criterion-related personality studies into personality dimensions according to Norman’s “big five” taxonomy. The “big five” personality dimensions are Extraversion, Agreeableness, Conscientiousness, Emotional Stability, and Openness to Experience.

Analysis across occupational categories revealed that Extraversion was positively correlated with performance in management and sales jobs, ones which involve good interpersonal skills. Agreeableness was expected to be positively correlated with performance in management and sales, but very little support was found for this hypothesis.

The Emotional Stability dimension was expected to predict success across all occupational groups, but actual correlations were, in fact, mixed (even negative for management jobs). The most consistent predictor of performance across occupational types was the Conscientiousness dimension. The authors found that the Openness to Experience and Extraversion dimensions were associated with training proficiency.

In order to use personality factors in the selection process to predict performance, it is necessary to choose an instrument. Employers must be concerned whether an ostensibly neutral employment practice such as personality testing can be shown to have an adverse impact on a protected group or invade privacy, (O’Meara, 1994).

Conclusions
The FACES model provides a framework for enhancing the effectiveness of people in organizations. Employee-organization fit, employee attitudes, effective compensation and performance management systems, employee empowerment, and effective selection methods are components of the internal organizational environment which, if optimized, contribute to achieving this goal.

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