Winning - Jack Welch [36]
It should measure people on relevant, agreed-upon criteria that relate directly to an individual’s performance. The criteria should be quantitative, based on how people deliver on certain goals, and qualitative, based on how they deliver on desired behaviors.
It should ensure that managers evaluate their people at least once a year, and preferably twice, in formal, face-to-face sessions. Informal appraisals should happen all the time. But when it comes to formal reviews, one of the face-to-face sessions should let people know where they stand in relation to others. If your company practices differentiation, a good evaluation system is where the rubber meets the road.
Finally, a good evaluation system should include a professional development component. Managers should not only talk to their employees about next career steps, but should elicit from them the names of the two or three people who they think could replace them should they be promoted.
Even with all these characteristics, no evaluation system is first-rate unless it is constantly monitored for integrity. Someone has to have the responsibility—and the accountability—to ask if the evaluation system is capturing the truth, just as a good audit team does with the numbers.
Does the evaluation system really measure company values, or does it just measure financial results?
Does it really get implemented with sincerity, or do people blow it off as a waste of time?
Do people really learn at the end of it what they must do to improve their performance?
Only integrity can keep evaluation systems from becoming paper-pushing. And since there is no law to make it happen, and no audit team either, it is up to every boss giving an evaluation—with the vigorous support of HR—to take this responsibility upon himself or herself.
You won’t get thrown in jail if you don’t, but do it anyway because it will make you and your team better.
* * *
PRACTICE 3: Create effective mechanisms—read: money, recognition, and training—to motivate and retain.
* * *
I’ll never forget the time I was at a meeting about how GE should reward the winner of the Steinmetz Award, given annually to the company’s best scientist. I was a group VP at the time, and so my ears really perked up when one of the vice-chairmen, a guy with a lot of stature and a lot of dough, registered his opinion.
“These people don’t want money,” he said, “they want recognition.”
He must have forgotten where he came from!
Of course, people want to be recognized for great performance. Plaques and public fanfare have their place. But without money, they lose a lot of their impact. Even the Nobel and Pulitzer prizes come with cash awards.
If your company is managing people well, it tightly aligns good performance with rewards. The better you do, the more you get—and you get it in both the soul and the wallet.*
There is hardly anything more frustrating than working hard, meeting or exceeding expectations, and discovering that it doesn’t matter to your company. You get nothing special, or you get what everyone else does.
People need to get differentiated rewards and recognition to be motivated. And companies need to deliver both for retention.
It’s that simple.
Take the case of a woman I know who graduated with a degree in theater design from an Ivy League college and eagerly went to work as a buyer at a prestigious New York City retailer. Despite the grueling hours and low pay, this woman showed immediate promise. Her selections for the sportswear department broke sales records for six straight quarters, and she managed to repair the store’s relationships with two disgruntled vendors. Although it was not part of the job—and other buyers teased her for “overdoing it”—she worked the floor and the cash register to better understand her department’s customers.
For two years, this buyer got very little public recognition for her success. That was bad enough, but her bonus was also standard