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A study published by Harvard Business Review indicated that normal ‘performance indicators’ (education, experience, sex, gender, race, age) are NOT what cause a person to fit their job and become a superior performer with an increase in productivity and a decrease in turnover.

The study (360,000 employees over 20 years in 14 industries) concluded the factors that cause a person to fit their job are how well the respective person matches the needs of each job with regards to: mental capabilities, behavioral traits and occupational interests.

As we all know, success in any job is related to how well the person does the job.

However, the measurement of success in any job (sales volume and/or profit are commonly used measures along with inventory value, orders filled completely, etc) does not tell us WHY someone was successful or not, they just tell us IF the person was successful or not.

How well any person does in any job is DIRECTLY related to the learning skills required by the job, the behavior necessary in that organization, and the interests needed to stick with the job COMPARED to the capability of the respective employee.

In most companies, top performers have more productivity (at least 60%) and less turnover (up to 300% less) than average workers. Thus the connection between Job Fit and productivity and turnover is clear: the better the job fit, the higher the productivity and the lower the turnover.

Since top performers capabilities CAN be measured with regards to learning, behavior and interests in any job, a job pattern can be established that indicates what the job requires. Once the pattern is established (every job in every company is UNIQUE), potential candidates (or struggling incumbents) can be compared to the pattern to determine job match.

If a high job match is present, productivity goes up and turnover goes down because the employees LITERALLY fit their jobs.

If a low job match is present, productivity goes down and turnover goes up because employees can’t do the job (mental), can’t do the job the right way (behavior), or won’t do the job (lack of interest).

Unfortunately, an interview is the most common hiring process toda, which finds a top performer less than 15% of the time. In other words, the process fails to find the top performer you are looking for more than 85% of the time. Talk about a dysfunctional process!

If you are coming to St. Louis for NAMA National in mid October, I would recommend you plan to check out the HOT TOPIC presentations that are presented during show hours at the main NAMA both. You can be face to face with experts that CAN help your business, and ask them the questions you always want to ask….but never have the chance.

Coming next quarter: How your hirning process impacts your bottom line!

“See you in St. Louis, Louis”…..travel safe!

Sincerely,

Dave McCaffrey

Thank you for your recognition that Employee performance management is an important tool successfully used by best in class companies.

As you state, and I agree, many best in class companies also use objective measures of employee performance as well, including mystery shopping programs. I also agree that when used correctly and positively, this type of program can objectively measure employee performance on an ongoing basis, allowing managers to provide feedback and additional training where needed as issues arise versus waiting for a performance review.

While mystery shopping will measure employee performance in an objective manner, it cannot tell the company WHY the employee is not doing the job properly. Was it a training issue? Is it a management issue? Unless job fit is determined, all we can see is the fact, yes, through mystery shopping, that the performance is lagging when compared to company standards and objectives. However, the real information needed is WHY the performance may not be known at this time.

What you will see in our next post is the relationship between Job fit (a.k.a job match), productivity and turnover. Once a standard of success for a particular position is established, it becomes much easier to define the ‘WHY’ component of success in any position in any company.

Thanks again for your comment!

Sincerely,

Dave McCaffrey

Last quarter we discussed the fact that while employee performance management has been a mainstay of most organizations, the process is fraught with imprecision and dissatisfaction. 

Rather than serving as opportunity for providing direction, growth and alignment, Performance Management is more often seen as a necessary evil.  An Aberdeen Group study indicated there is clearly a disconnect between the concept of performance management and it’s successful execution, since 95% of study reported giving performance reviews but only 11% felt the reviews actually improved performance levels.

In our June post we discussed the two key performance criteria that defined ”Best in Class” Companies with regards to performance management:

1. Improved bottom line results: best in class companies experience a minimum profitability growth of 10% or move over last 12 months.
2. Increased employee retention rates: 94% of best in class companies increased or maintained stable employee retention rates over the last 12 months.

This quarter, we would like to discuss WHY focusing on performance management is seen as more important a project than ever.

According to Aberdeen, industry pressures are forcing all companies to adapt to change in two primary elements of their business.  First, the labor pool is shrinking and second, the pressure to perform more profitably is unceasing.

The study show the top five (5) pressures driving performance management within a company were:

1. Pressure to improve overall company performace indicated by 57% of group.

2. Pressure to improve employee productivity indicated by 46% of group.

3. Pressure to increase employee satisfaction indicated by 31% of group

4. Pressure to gain visibility of goals, metrics and ratings indicated by 30% of group

5. Pressure to add structure to the process indicated by 20% 0f the group.

Key takeaway?  Employee Performance Management used by best in class companies as method to increase company performance.

Key disconnect? 31% of group indicated they were dissatisfied with their Employee Performance Management Solution.  Bottom line? The review process is anticipated by both managers and employees with a great deal of dread and trepidation. 

 Aberdeen’s study showed:

• Best In Class:  in the top 20% of companies, 94% improved employee retention and 88% increased profit at least 15%.

• Industry Average: in the middle 50% of companies, 74% improved retention and 4% increased profit at least 15%. 

• Laggard: in the bottom 30% of companies, 59% improved retention while 0% increased profit at least 15%. 

Key Takeaway?  Companies that successfully use Employee Performance Management are much more likely to retain more employees, leading to significant profit growth. 

The key to success?  Hire employees that fit their jobs, and make sure they are capable of doing the job, doing the job how you want it done, and being interested in doing a good job.

 Coming next Quarter: What IS the connection between productivity, turnover and job match?

Thank you for taking the time to read about Employee Performance Management.  Your employees are your company’s largest asset; with workforces shrinking, employee retention will be key factor impacting success of any company.

Hope to see you in St. Louis at NAMA National October 15-17, 2008. 

 Sincerely,

Dave McCaffrey

MTA (New York’s Metropolitan Transportation Authority) recently announced that they would hike fares by .25 cents because “vending machines can only dispense dollar coins and quarters.”  This has Big Apple straphangers’ up in arms (no pun intended) saying “It is not acceptable to say the vending machines made us do it.”  Following closely behind this news, is an admission by MTA that a “software glitch” has allowed vending machines to dispense free train tickets in the amount of $800,000.00.

This example suggests to me that outsourcing opportunities for the unattended sale of non-food and beverage products may exist.  Many hi-tech savvy, full line vending companies could do better than MTA in managing the process of unattended sales of train tickets.

Sources of new revenue from the vended sale of food, snacks and beverages are vanishing and will continue to do so.  It is time to get serious about searching for new revenue sources.  Take a look around your market place and note any unattended sale of any product and service.  It might be worthwhile to approach government agencies or private locations with a respectful proposal outlining the strong advantages of your experience in the management of unattended sales.

An absolute prerequisite for soliciting this channel will be the need to meticulously study state-of-the-art software systems and machines used in the sale of non-food and beverage items.  It will require plenty of hard work and lots of new learning; is it worth the effort?

I am not sure, but it certainly beats the alternative.