“The majority of blue-collar workers believe pay increases should be earned by performance as opposed to tenure.”
The workforce today wants to be great at what they do. The employees want objective performance reviews, and they want to be recognized when they are adding value for the business and team.
Creating a performance management system at work can be successful if you do these three things. If you miss one of the three foundations in your performance management system, you won't achieve the benefits of more engaged employees and better business results.
The system must be fair
This is the most important of all the points in this blog. Your performance management system must be fair, and the majority of employees need to agree that it is fair. If employees don’t agree that the system is fair, they won’t even participate. No one wants to participate in an unfair system and “lose.”
Here are some ways you can make sure the system is fair:
- Engage your top 5 employees from each department and ask them if the system seems to fairly award credit for performance
- Assign a “value” to each task and award exactly that amount when the task is completed
- Make sure that the majority of employees agree to the task “value”. A common question here is, “without any major issues, how long does this task normally take?”
- Give employees equal access to opportunities to add value. If you give all the big value tasks to one team or shift, the system will not seem fair.
The system must reward people publicly
This point is often overlooked. If there is no public recognition, no one will care. The feedback loop of “winning” or being in “the top 10” of employees is so important to keeping the team focused on improvement. People will doubt that you are going to stick with this new system, so you need to post results publicly to hold yourself and them accountable. Most of the time it only makes sense to post the “top performers” results and not the whole list. You aren’t doing this to shame employees, you are doing it to create energy and excitement around “making the list.”
It's all about giving out giftcards, right? Nope.
When I mention rewards publicly, a lot of leaders think “oh so I need to give out gift cards.” No, you do not have to give out gift cards or a monetary reward. Your goal is to create a self sustaining culture of improvement, and if you start giving out “rewards” the system will not be about “improving” or “winning”, it will be about you and what you give. Do yourself a favor and let the reward be pride and bragging rights. You’ll thank yourself later.
Here are some ways to reward people publicly:
- Post a “top 10%” of employees every day for total value added
- Post a "top 10%" of employees every day for most efficient (value added divided by labor time)
- Implement a live performance system like Ampogee to post top performers for you
The system must promote the right incentives
The final point here is the last key to making the performance system stick. Let’s say you have a fair system and you are posting the top employees every day. Now employees are going to test the boundaries of your system and find ways to get their performance to improve. If you haven’t designed the system to have the employees work extra hard on the things that are most important, then you are going to have a lot of energy going into something you don’t need.
The easiest way to explain this is via a story. On a packaging line people typically get credit for making more product. When the line has to change over to make another product, that involves some amount of “down” time for the equipment and most likely some manual undesirable labor for employees. If you fail to incentivize employees to want to do this type of work, they will do everything in their power to avoid it. I’ve had people slow down the line so that the changeover would hit the next shift. They were going to get the same amount of “credit” for slowing the line down because they weren’t incentivized at all to do the changeover. Here is how we changed that: we started giving employees credit for doing the changeover. Let’s say the typical changeover should last 1 hour, we awarded one hour of credit for the task. Next thing we knew, people were finding ways to shave off 5 minutes, then 10 minutes. We still awarded 1 hour of credit. Now the teams were incentivized to get the product out of the door and change over the line.
That’s a long story to say, you have to make sure that when people “game the system” to get the best performance, they win and the company wins at the same time. After all, isn’t that why you designed this system in the first place?
Here are some ways to align incentives:
- Ask what do people consider the as undesirable tasks? Make sure that you are giving appropriate credit for these
- When you look at your process, do you see any bottlenecks? Maybe no one is doing those tasks because there is no incentive to do them
- When you see the top performers on paper, does it feel like they are really adding the most value for the business? If not, you need to take a closer look at how they are winning and adjust the credit.
You don't have to overthink your performance management system. If you start small and implement these three key points as foundations in your system, you will be able to measure the impact and then grow it to measure more of your workforce.
Think this sounds interesting? This is what we do. We help you design and implement a performance management system without creating extra work for you. With Ampogee, you can motivate the employees without adding to your to-do list.
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