|Background||Strategies for Success|
|Quantify the Benefits||Action Plan|
|What's Best for Your Organization|
Many managers focus motivation programs on their top performers at the expense of the vast middle, where even a little improvement can have a significant effect. Here's how to structure performance-improvement efforts for maximum impact on the middle 60 percent of your organization.
"The same people always win." That's one of the most common complaints voiced by salespeople or other employees when they take a look at the new incentive program. Year after year, a small group of people always seems to come out on top.
Almost every organization, be it a poker club or a major corporation, has a top 20 percent. That's the roughly one in five individuals who give their all. For whatever reason, they have bought into the organization's mission and have the knowledge, skills, and diligence to excel. At the bottom of every organization, there's that other 20 percent, the people who could care less. They probably shouldn't be in the organization to begin with.
In the middle is a large group that, though more difficult to define, holds out a tremendous opportunity for performance improvement: the middle 60 percent. These people whether employees, salespeople, or middlemen don't operate at peak performance, but they have the potential to do better.
Various reasons explain why so many people fall into this large group. Many don't have sufficient buy-in to the organization mission to get charged up. Some have the will but are held back by their lack of knowledge, training, or management. Others simply don't have what it takes to perform better.
The mathematics of improving performance in the middle 60 percent is compelling, because this group represents the bulk of any organization's work force. Efforts to get the best out of the middle typically yield modest per-person gains, but the collective impact can be significant.
Many organizations overlook the ability for performance improvement among these average performers, relying on the well-known theory that the top 20 percent in any group is likely to produce 80 percent of the results. However, research conducted over the last decade by Harvard professor Leonard Schlesinger lends support to the notion that paying more attention to the legions of average performers can have a favorable long-term impact on profits, market share, and customer retention.
The lack of emphasis on the middle 60 percent in most enterprises suggests that most managers overlook the benefits of motivating this group. Take a stab at the arithmetic in your own organization. It's easy with salespeople, because you'll quickly see that a slight improvement by the middle 60 percent is achievable and can affect overall results very favorably. It's found money. The same sort of arithmetic makes sense in almost any area of an organization. Time lost to accidents, the ability to do more with fewer employees, improved customer retention due to better service or product quality, all can have a long-term impact on the bottom line.
Start by ranking your target audience based on buy-in, commitment, and performance. Does your organization fit the 20-60-20 profile? Perhaps it's doing much better or worse. Field managers can provide input for this analysis. If you can honestly say that more than 50 percent of your target audience salespeople, employees, or middlemen fall into the category of high performance, you're already doing a lot of things right. You will also have a harder time eking out additional gains from people at this level.
If you have a large percentage of people at the low end of the scale, there may be serious underlying problems that can be redressed only by the concerted action on the part of senior management. If yours is like most organizations and falls somewhere in the 20-60-20 range, however, there probably are immediate steps you can take.
In any case, it's critical to determine what factors explain your organization's particular performance mix. It's especially important to assess such things as top management style, middle management style, level of buy-in to the organization's mission, amount of training, percentage of turnover, and the demographics of the audience. It also helps to determine how improving commitment will affect such factors as sales, productivity, customer retention, and safety. That will increase the chances of having a measurable impact on the bottom line.
You can do this informally or through a formal process of employee and management surveys and focus groups. Once you quantify the potential value of improving the performance of the middle 60 percent, you can determine how much money to spend on the effort. If you already have incentive and training programs in place, it might cost relatively little in additional funds.
Note: Many performance shortcomings are the result of management indifference. With top-management turnover at many organizations resembling a game of musical chairs, it's difficult to foster a long-term emphasis on corporate goals and how people can help achieve them. Employees often conclude, rightfully, that many performance initiatives are just gimmicks that will go away when the next chief executive takes over.
If your organization has effective leadership, competitive compensation, a good working environment, and an excellent product or service, getting the most from the middle 60 percent usually can be achieved by concentrating on the factors discussed in the next section. However, if your organization is in decline, if top management is uncaring of employees or customers, or if your products or services are under serious competitive assault, there may be little any manager can do to improve the contribution of these average performers.
Here are the steps you can take to get the middle 60 percent of your work force focused on improving their efforts to achieve your organization's objectives:
Setting realistic goals. As with any performance-improvement effort, the process begins here. What do you want your target audience to achieve? Is the goal reasonable? You might expect top performers to improve performance by double-digit margins, but you can't expect similar results from those with limited ability. If previous data exists, look to see what sort of performance improvement has occurred in the past during an incentive or training effort. If there is little evidence that the middle group has achieved the kind of improvement you envision, come up with a more conservative forecast. People rarely reach for goals they feel incapable of achieving. Too conservative a goal, of course, could have the opposite effect.
It's also important that the goals be quantifiable. Some examples: Increase sales by 5 percent in the fourth quarter versus the same quarter last year; decrease customer complaints by 10 percent versus the same period last year; increase the output of assembled units on a production line by 15 percent.
Employee involvement. Most companies press ahead and try to design an incentive or performance program with little input from the target audience. That is extremely unwise. Before designing any campaign, it's critical to determine what leverage points can improve the chances of success and what obstacles might stand in the way. Using a trained facilitator, provided by your human resources department or an outside vendor, assemble a group of representative employees (good performers as well as average ones) and use a friendly approach to determine:
- what degree of performance improvement is feasible;
- what suggestions participants have about how to achieve your goals;
- what obstacles they see;
- what the organization can do to improve the chances of success.
This is a painstaking process, but it often uncovers issues that otherwise escape notice. For example, you may discover that there are obstacles that no incentive or training effort could overcome, and thus save the organization from launching a costly flop.
Before inviting this kind of involvement, however, explain to employees that, although their input will be carefully considered, there is no guarantee that their ideas will be implemented. Employees generally take the process seriously and need to know that outside factors sometimes prohibit organizations from implementing even the best ideas.
If successful, this process will help you determine the following: to what extent employee performance can be improved; where the opportunities for improvement are; what obstacles stand in the way (and which of those can be overcome), and how to measure performance.
Be prepared for some disappointments. You may discover that the target audience feels a lack of a clear mission, or that it doesn't have enough training, motivation, feedback, or recognition. In the case of middlemen, such as distributors, agents, or independent sales representatives, you'll often hear complaints about product reliability, customer service, response times, or lack of marketing support.
The mission. Employees strive harder to achieve designated goals when they believe in a company mission. Many companies fail to foster this kind of commitment, but there are some well-known exceptions, such as at Southwest Airlines, Nordstrom's, Federal Express, and Starbucks. Perhaps customers of these companies aren't always greeted by a perfect employee, but the norm is a step above average. A greater proportion of these employees buys into the corporate mission of satisfying the customer, increasing the chances that they will deal with people in a pleasant, productive manner. Such behavior obviously must start at the highest levels of any organization. No incentive or training program can replace the role of good leadership.
Training. In the context or performance improvement, training refers to programs that go beyond those generally made available, say, when people join an organization. The same holds true for programs with middlemen. When the objective is to improve the performance of the middle 60 percent, training should be directed at specific issues related to the achievement of the organization's goals. For the duration of the campaign, training reinforces the effort and is directed where it can have the greatest impact. Thus training must offer clear benefits to the recipient, come in a quick, easy-to-digest package, and be available when needed. With the growth of the Internet and organization intranets, training can be enhanced and updated continually at relatively little cost. Note: Online instruction should not be provided at the expense of face-to-face instruction when that is clearly the best solution.
Performance measures. Athletes need benchmarks to improve performance, and employees are no different. Yet, aside from sales functions, it often seems so difficult to measure performance that most organizations give up. If they bother at all, they assess programs by relying on subjective, and generally unreliable, means. However, work by the American Productivity and Quality Center in Houston shows that most of an organization's functions can be easily measured. (For information on how to obtain the Master Measurement Model developed by the center, see Research.) Providing concrete measures allows you to identify performance problems and correct them right away. That's why any well-run factory or sales operation has performance numbers prominently displayed so that all can see them.
Incentive program structure. Because most managers have little or no formal training in developing incentive programs, many campaigns inadvertently favor top performers. For purposes of simplicity, organizations often use so-called closed-ended incentive programs, which reward only the top number of people in their organization. With that approach, rewards usually go to the same people year after year, leaving out the middle 60 percent of the group. In contrast, open-ended incentive programs do a much better job of addressing the middle 60 percent, because they reward all participants for performance that exceeds a benchmark. Although this approach is more complicated to budget, it gives everybody a chance to make a difference and be recognized for it. Each person competes by trying to surpass his or her previous performance, rather than having to face the impossible task of competing fruitlessly year after year against top performers.
Communication. People throughout the industrialized world are bombarded daily with information. They rarely have time to grasp anything that is not essential to their lives. Since work carries with it a degree of importance, organizations can break through with important information if they make sure that all employees realize that they can benefit by knowing the information. Also, the message must be fashioned for maximum impact and conveyed so that it can be absorbed quickly. In the case of incentive programs, routine award statements or reports of performance results can provide an ideal medium for strategic messages. These should reiterate the organization's mission, the goals set forth for the program, and the requirements for winning a reward. Among the most popular media for this sort of communication are brief newsletters, Web sites, standings reports, training updates, videos, and satellite feeds.
Recognition. Surveys of employees and middlemen commonly reveal that people feel neglected, and this attitude is prevalent in the middle 60 percent of any work force. Time after time, respondents complain that they get little positive reinforcement for doing an exceptional job. They claim to work hard solely as a matter of personal pride. It should come as no surprise that companies with a reputation for enhanced customer service always put great emphasis on recognizing exceptional performance by employees at every level. A truly customer-driven company also goes out of its way to publicize this recognition so that exceptional performance will be remembered not only within the organization but by the community at large. Top executives participate in banquets or other programs honoring individuals who, though not always among the highest achievers, have consistently shown improvement. Especially when awards are presented in a public forum, every effort is made to ensure that the event underlines the organization's ability to motivate employees in the cause of customer satisfaction.