Buying: Choices in Staffing

Staffing brings people into the organization. It is probably the single most important HR practice, because if you have inadequate personnel, all the training, incentives, and communication in the world will not complete their makeover. Your people must have the abilities needed for today’s job as well as tomorrow’s. Staffing involves three major processes: expanding the candidate pool, hiring the best candidates, and orienting them to the work.³

Expanding the candidate pool improves your firm’s chances of getting the employees it needs. Here are some ways to widen the pool.

• Build relationships with key sources of talent. Recruit on targeted campuses, develop relationships with key faculty members and with search firms who know your industry, and show up at technical conferences or trade shows.
• Use referral hiring. Ask current employees to suggest people they think might fit in, and pay a bounty for referrals who stay with you for a set period (a year or more). It’s also useful to ask customers or suppliers for similar referrals.
• Build an Internet hiring strategy. Maintain a strong online presence with an attractive Web site linked to recruiting services; make it easy to apply for a job online; provide rapid feedback to let candidates know where they stand.
• Target potential employees. Use radio and TV ads; participate in job fairs; sponsor open houses; offer apprenticeships to strong prospects who are still in school; reach out to downsizing companies; recruit former employees who would be welcomed back. Build dossiers on candidates who reject offers, tracking events such as changes in their current company, marriage or the birth or graduation of a child, and salary reviews and project terminations that might make them interested in moving.

No matter how large the pool, it’s still critical to fish out the right candidates and keep them hooked. Your “hit rate” will never be perfect, but if you do the right things, you will increase your ratio of offers to acceptances. Here are some ideas for increasing the hit rate.

• Interview with intent to hire. Communicate commitment to qualified candidates by including key line managers, customers, and coworkers in the interview process. Respond quickly after the interviews. Ask senior and visible line managers to invite the chosen applicant to join the firm (a call from a CEO or senior line manager sends a clear signal of how valuable the candidate is).
• Create and market your employee value proposition. Show what employees get from working at your company; brand your firm for future employees; advertise this value proposition to current and potential employees; communicate this value proposition in interviews and screening; personalize or tailor the employee value proposition to the needs of top candidates.
• Offer financial assistance. Financial assistance for new hires might include a sign-up bonus (cash or stock), help with student loans, relocation assistance (moving or home loans), and home office setup (a computer and connection to the workplace).
• Communicate realistic but enticing opportunities. Describe international assignments; review first posting and projects; discuss teammates and how the candidate will fit in with the team; highlight factors that tend to influence prospective employees (pay, benefits, vacation, work hours and policies); preview training opportunities for the first three years; discuss mentors and encourage mentorship of new employees.
• Pay attention to personal issues. Talk about spouse and children if relevant; review company culture around personal lifestyle; market the quality of life that the company creates; show how the company will attend to an employee’s personal issues.
• Be persistent. The best candidates will have multiple job offers. Don’t give up on them. Make them feel wanted by frequent contacts, even hokey kitsch (e.g., a shirt, jacket, or flowers from the company). Ensure that the targeted employees have daily contact with key people inside the company.
• Form relationships. Most work revolves around interpersonal relationships. Surround desirable candidates with a sense of being wanted and of fitting in. Help them sense that their future relationships at work with leaders and coworkers will be positive.

Once someone is hired, orientation is crucial in getting the candidate quickly up to speed and productive.⁴ Sample orientation efforts include the following:

• Administrative necessities. Efficiently and quickly cover the administrative details (company ID, parking, official forms, computer hookup, and so on) to make a good first impression.
• Early feedback. Within thirty, sixty, and ninety days, offer direct and honest feedback about work to date. This sets a positive tone and makes any course corrections early in the employment.
• Quick success. Find an assignment where the employee can take responsibility for a task and accomplish it. Letting the new employee achieve success early creates a can-do feeling.
• Orientation to the entire value chain. Arrange contacts with suppliers and customers who will generate and use the output of the employee’s work; show how the job fits into the overall strategy of the company.
• Team assimilation. Share team history, norms, expectations, and required performance. In order to build mutual acquaintances, have the team talk to the new employee and the new employee talk to the team.
• Listening. New employees often have insights on how to improve operations. Invite new employees to meals or other informal sessions with a leader to share their observations and ideas.

These days, we face an apparent paradox: hiring the right people is more critical than ever, but hiring is declining as a differentiator of performance. This is logical though somewhat counterintuitive. If you do not try to get the best people, your company will fail. However, your competitors are also trying for the best, and they’re probably doing about as well as you are. So what makes the difference is not who you hire (unless, of course, you bring in people who can’t do the job)—it’s what you do with them afterward. And that does not mean simply retaining them. It means providing the environment, direction, and training for them to contribute optimally to business success.

Building: Choices in Training and Development. Building means unleashing latent talent by focusing on either training or development.⁵ To make informed choices about training, HR leaders should address the following questions:

• Who should attend the program? Do you want to invite employees at one level or multiple levels, by themselves or in teams? Do you want to invite customers, investors, or suppliers to participate?
• Who should present the program? As program facilitators, will you use professors, consultants, or line managers who may be better at running a business than teaching, but who have enormous credibility and real-world experience? Do you want to include customers or investors in the teaching role as living case studies, role plays, or presenters?
• Who should design the program? Will you involve outside experts who have a point of view and experience in other companies? Will you enlist line managers, customers, or investors who want to design the training to accomplish their goals? Who will be on the program steering committee?
• What should the program cover? Will you build it around abilities individuals need to have? Around capabilities required for the organization to succeed? Or around results that key stakeholders need from participants? How will you build in action planning for individuals or teams? How will you ensure a transfer of learning from the training experience to the work site?
• How will the program be delivered? Will it be conducted on-site, off-site, or in a number of places? Will you use cases or action learning? Will it focus on individuals, small groups or large organizational units? Will the course be self-directed or other-directed? How will technology (e-learning) contribute to the design and delivery of the course? Will it occur in a short time period (three days or a week) or over time (two days a month for six months)?
• How will the program change the participants? What will you do to measure the impact of the training? Will you look at reactions to training, knowledge received, behavioral change, actions taken, or business impact?⁶ How will you be accountable for results? How will you follow up with action plans? How will you create a measure of financial return for the training investment?

The other half of the build menu comes from development—from opportunities to learn from experience.⁷ Development may take a variety of forms:

• Mobility. Employees learn from new assignments that stretch them to learn new skills. Some firms have sponsored international job swaps to develop global sensitivity, functional rotations, or postings such as “deputyships” to encourage learning.
• Mentoring or coaching. Programs such as 360-degree feedback, assigned mentors, or formal coaching help employees learn, as do informal mentoring or coaching from leaders in day-to-day interactions with employees. Those who serve as mentors or coaches also learn from the experience.
• Outside experience. Participation in community service can help employees build both relationship networks and leadership skills. Sabbaticals allow time to explore ideas and concepts that may be only tangentially related to their current role. Fellowships to universities or think tanks often engage employees and orient them to new perspectives. Time off from work to explore personal issues may enable employees to return refreshed and engaged.
• Personal development plan. Creating a plan that includes reading, attending professional conferences, visiting other companies and individuals, or engaging in experiences designed to broaden perspectives (anything from singing in a choir to biking in the Himalayas) can help employees take responsibility for their own development.
• Temporary assignments. Ad hoc teams—projects taken on in addition to regular duties—often promote employee development. Internships (i.e., full-time temporary assignments) have a similar effect, allowing individuals to improve their understanding of the firm and vice versa.

Borrowing: Choices in Contracting for Talent

A firm need not own all the human capital it uses. It can take advantage of the talents of individuals who are not its full-time employees. Here are some options for accessing talent without ownership.

• Form joint alliances. Trade associations exist for almost every industry, allowing members to learn from others. Groups like the Conference Board, for example, have forums focused on performance within their industry. Consulting firms often team up with similar firms. Some industries codevelop new technology through alliances, as with the consortium (Apple, IBM, Microsoft, and other companies) that established the DVD standard.
• Do site visits. Visiting other companies often provides benchmarks and insights. This means going beyond the PowerPoint presentations to see how other companies really work.
• Retain consultants. Using consultants wisely brings new ideas into the company. Work to adapt rather than adopt their ideas, tailoring them to your business and making sure you own the results. Hire a specific individual rather than a firm; create a clear contract with expected outcomes and processes for delivering those outcomes; and continually monitor both the performance of the consultant and the impact of the ideas and tools. Assign permanent employees to work with the consultant to transfer knowledge into the firm at the end of the project.
• Outsource work. Figure out where you want to excel to win and where you are willing to accept industry average. When industry average is good enough, consider outsourcing the work to vendors who become your partners. Their expertise enables you to focus on your expertise—but you still need to manage the contract carefully, maintaining clarity about service levels and payments for performance (see chapter 8 for ideas on outsourcing).
• Maintain relationships with former employees. Former employees can be a source of enduring talent, either as vendors or as part of their new organizations. This works both ways: former consultants often channel business to their old firms when they move into line manager positions. And former technicians and managers often find ways to be of use to previous employers while working in consulting or supplier organizations.

Bouncing: Choices in Shrinking the Workforce

Although the term rightsizing makes language mavens howl, it expresses an important concept. In the current business environment, a firm needs a workforce of the correct size for its immediate and near-term output—and few firms can find ways to increase output (and sales) to absorb excess workforce capacity. Firms need to cut back to bring things into balance. And size isn’t the only factor: any firm, no matter how lean its workforce, needs the right people—those with the will and ability to pursue its goals. It doesn’t matter whether poor performance comes from a bad hire or from failure to update the knowledge and skills of current employees; the firm will suffer as long as it is allowed to continue. We refer to both types of cutback as bouncing.⁸

The risk of keeping poor performers is magnified because their scanty or damaged output is often the least of the problems they cause; the perception that poor performance is acceptable can be devastating. In bad economic times, having a poor performer in a chair is worse than having an empty chair, because they use resources and do not contribute. In good economic times, weaker performers may produce, but they still cause problems, because tolerance for their poor performance may become a standard. For best results, deal with performance problems openly. Just sliding a poor performer out the door will eliminate inferior output and make the firm more efficient by relieving coworkers of the ex-employee’s drag—but it ignores a third and far more powerful benefit: setting an example. Instead of explaining the firing of a specific individual, most firms simply lie. They say something like “Bob Leblanc is seeking more attractive career alternatives consistent with his long-term goals and aspirations”—even if Leblanc was caught cheating customers. The inhibiting factor may be threat of legal action, a tradition of avoiding harsh messages, or lack of clear criteria and evidence. Whatever the reason, the decision to gloss over the departure costs the organization a valuable opportunity to signal its behavioral and achievement standards.

Removing employees for any reason should be difficult. It should be personally painful for the responsible leader and require reflection on what went wrong. Communicating care for the employees who leave and who stay becomes important in any circumstance. The TV-cute tag line “You’re fired!” is archaic and destroys employee goodwill. It’s necessary to move decisively but to show care by offering performance and outplacement counseling and by considering the impact on the individual.

In the end, however, the decision to remove an employee should come from a system, not a relationship. Choices for paring back the workforce vary depending on the circumstance:

• Involuntary downsizing. When labor costs must be reduced, HR leaders should take care to ensure that the right people leave. Use strategic differentials (e.g., cut 15 percent in one department and only 5 percent in another, rather than 10 percent across the board) to focus the cuts where the slack is greatest. In addition to moderating the overall impact by encouraging early retirements, creating severance packages, and using outplacement firms to help employees find new jobs, make sure your top performers feel secure. Offer attractive jobs to employees who can be reassigned. After the downsizing, reassure people and help them stay engaged and focused on the work, rather than on protecting their careers.
• Performance problems. Employees who are not meeting expectations must be removed before they taint the rest of the workforce. Ensure fair due process, of course, and fulfill legal requirements and union agreements—but avoid the common regret of not having acted soon enough. Don’t agonize over employees who cannot do the work. Be clear about what is expected, and then make it the employee’s choice to stay and work or to not work and leave.

Binding: Choices in Retaining Talent

Retention—binding existing talent to your firm—matters at all levels.⁹ Senior managers with vision and competence are critical to a firm’s success, which is why they are hot prospects for rival recruiting. Many technical, operational, and hourly workers are equally critical. Investments in individual talent often take years to pay back. Often referred to as “A” players, an organization’s top talent produces many times the value of average or poor talent. Here are some of the choices for binding top talent to your firm.

• Find out why talented people leave. Ask talented people why they have decided to respond to the eighty-fifth headhunter who called after not doing so earlier—and respond to the conditions they report. Be honest in looking at this data to figure out what you might have done differently. If high performers are leaving certain parts of the organization in disproportionate numbers, investigate conditions in those areas.
• Offer financial inducements to stay. Although money is rarely the dominant motivator when people leave, it can be a factor in the decision to stay. True pay-for-performance incentives send a clear message to top performers. Retention bonuses (cash or stock options for those who stay a designated length of time) also help keep top talent from moving.
• Offer intrinsic rewards to stay. For the people you most want to keep, the opportunity to identify and undertake high-value, challenging work is the biggest inducement to stay. Everyone wins. The company gets greater value per compensation dollar, and the employees are both happier on the job and more valuable on the market. Customers and shareholders are better off by having employees face the greater challenges of meeting customer needs or reducing hidden costs.
• Offer other nonfinancial inducements to stay. Perks help assure people that their employer values their contributions, and people who feel valued are likely to reciprocate. Sabbaticals, development experiences (especially when they include top management visibility and reputation), flexible work arrangements, family support, and other measures can help bind employees to their jobs, especially when they can choose the mix that suits their needs. Simply letting talented employees know they are valued is an amazingly simple but profound gesture.

Boosting: Choices in Promotion

Promotions not only put people in the right jobs, they show what matters to your firm. Care in this area ensures that the right signals are sent to all stakeholders. Here are some of the choices around promotion.

• Establish criteria for the new job. To match people and jobs, you need to know what the job will involve. To define clear requirements, translate the strategy into specific expectations: What do we want a person in this job to deliver? To be known for? To accomplish? Answering these questions enables you to evaluate candidates against an accepted standard.
• Allow volunteers—but don’t stop there. Some people want to be promoted when their desire exceeds their capacity. Others hold back when ready for more complex jobs because of lack of confidence, or because of outside factors that seem to make it unfeasible to accept. Thorough and candid career discussions should help you know when someone is ready and able to take a promotion, and what (if any) adjustments need to be made to deal with work-life balance questions.
• Evaluate candidate potential. Few people promoted into a more senior job are really ready for it (or they would have had it already). Promotion practices need to include an assessment of the candidate’s capacity to grow into the job, which requires willingness to learn and try new things. Be aware that what resulted in high performance in the present job may not be what is required in the next job. Include multiple assessors to gather different points of view about potential candidates.
• Support new job holders. Once the decision is made, throw your full support behind the chosen candidate. It is likely that two or more candidates could do the job well and that the winner will be only marginally preferable. Nonetheless, even someone who wins a new job with 51 percent of the votes needs to go ahead with 99 percent of the confidence.

Setting Standards: What to Measure

People often measure what is easy, not what is right.¹¹ For example, consumer products firms often measure revenue per line but not profit per line, per customer, or per area (all of which are tougher to track)—then may fail to notice their fortunes declining behind the rising index. Learning how to define and measure what is right rather than what is easy begins the process of performance management. Here are some of the HR practices that create clear standards and measures.

• Align standards and measures to strategy. The line of sight from business strategy to personal expectations must be clear. To get effective standards, ask, “If this strategy works, what will we see more of? Less of?” That will lead you to measurable behaviors and outputs tied to your strategy. The balanced scorecard is a helpful discipline for defining standards related to value for investors (financial measures), customers (service and share measures), organization (capability measures), and employees (ability measures). Stakeholder-based standards and measures show employees how to add real value.
• Balance behavior and output standards and measures for individuals and teams.¹² Standards and measures fall into four categories, as shown in table 5-1. To decide what is worth most attention, divide one hundred points among the four cells. Some jobs carry more weight in some cells than others. Sales jobs would probably have more points dedicated to individual outcomes (sales per employee) than R&D jobs, which might place more weight on individual behavior (participation on a team). Nonetheless, each cell should have its own standards and measures.
• Prioritize measures. Not everything that can be measured should be measured. Concentrate on the standards and measures that matter most to each stakeholder. Balanced scorecards need to be focused to have real impact.
• Identify lead indicators. The best standards and measures are lead, not lag, indicators. Lead indicators affect future performance. Employee attitude, for example, can be a lead indicator of customer attitude.¹³ So, in selecting standards and measures, it is important to pick items that will affect other items. In one organization, a sales review found that 7 percent of cold calls reached people who said they might be interested; 10 percent of those who expressed interest accepted a follow-up; 25 percent of those who accepted a follow-up said they were committed to using the product; and 50 percent of those who claimed commitment actually used the product. Because of the insights in this value chain, the leaders focused attention on increasing cold calls. They also worked to increase the success percentages of each step, but the lead indicator—the variable employees could control directly—was the number of initial contacts.
• Set stretch targets. Standards and measures should demand performance higher than current levels, without being unattainable. With a group doing similar work, a simple solution is to take the top of the current performance range and set the standard near there. That sends the message that the standard is attainable—someone has already beaten it—but meeting it will raise overall performance. In the sales example, representatives were averaging 5.2 calls per day in similar territories, with a range from 2 to 9.5. The new standard was set at 9, providing an attainable stretch target.
• Measure what can be controlled. When the goal is to influence customers and investors, it’s tempting to use measures that focus on purchases and stock price. Unfortunately, those results are often too far removed from employee daily action to serve as a useful guide. Tracking stock price motivates employees to follow the market, but they feel like fans rather than participants because they cannot see how their work directly affects shareholder value. In the sales example, the contacts-per-day target was within the control of each individual employee, thus becoming a valuable standard and measure.

Setting Standards: How to Build Measurement Systems

Deciding what to measure communicates what matters; the process of setting and monitoring standards determines how well those measurements work. For example, two theater groups with the same script may get dramatically different reviews. Two firms with the same standards may get drastically different results. It all depends on how well they use the material. Here are some choices for setting and monitoring standards:

• Who sets and tracks standards. When employees participate in setting and monitoring standards, they accept more accountability for delivering results. One of the best leadership practices is to share data with employees, then ask what they think they can and should do. We have found that most of the time, employees set standards as tough as managers would have set—or tougher. And virtually all the time, results are better with employee-participation standards than with imposed standards.
• What tracking means. Standards and measures must have both positive and negative consequences. To produce action, the results must be more than mildly interesting—which means they must be tied to financial and nonfinancial rewards.
• How results are tracked. Ownership matters. When employees post their own results and observe how they are doing, the feedback loop is tight enough to influence their performance. It is useful to create dashboards—either online or paper-and-pencil—that allow employees at all levels to track their performance. Timely information helps people self-monitor and improve.
• Frequency of feedback. In addition to ongoing performance dashboards, it is useful to provide formal feedback at regular times. Quarterly, semiannual, or annual reviews give people a chance to step back and look at the big picture.

Setting Standards: How to Build Appraisal Systems

Combining standards and measures forms a performance appraisal process. This process answers a series of questions for employees.

• What’s my job? Employees should see their individual job responsibilities reflected in the appraisal’s performance standards and measures.
• How am I doing? Employees should learn how well they are performing on the job. Such feedback helps employees determine how they are doing in light of standardized expectations.
• Does anybody care? Employees should learn that managers care not only about accomplishing business results but also about employees’ quality of life.
• How do we fit in? Employees should see how their personal work and how the work of their unit fit into the overall strategy of their organization.
• How are we doing? Employees should learn not only how they are doing individually but also how their unit is performing. High-performing individuals can often help bring up the level of low-performing units if they recognize the need, and low-performing employees in high-performing units can be inspired to improve their efforts.

Allocating Financial Rewards

Money may not be everyone’s main motivator, but it does affect everyone—and its economic, psychological, and social implications matter more for some employees than for others.¹⁴ Economically, money enables employees to develop a lifestyle that suits their needs. Psychologically, money provides a feeling of personal worth and self-esteem. Socially, money determines a pecking order and a role and legitimacy in peer groups. Choices around money can generally be clustered into four quadrants, as in table 5-2. (The short- or long-term time frame refers to the relationship between the effort and the reward.)

• Short-term cash. Base salary or on-the-spot cash compensation helps employees create and maintain a lifestyle. Payments should be equitable internally and externally—that is, those who perform better should be paid better, and pay should fit the range of market rates. Base salary generally reflects tenure with the organization, job title, and performance.
• Short-term equity. Equity awards make the employee an owner in the company. Stock grants (where the employee receives stock as compensation instead of cash) can be based on performance, title, or seniority.

  TABLE 5-2

  
  Financial choices

  	Short term	Long term
  Cash	Base salary or on-the-spot rewards for milestones or exceptional performance	Bonus (a form of profit or gain sharing)
  Equity	Restricted stock or stock grant	Stock option

• Long-term cash. Cash bonuses based on continuing performance (often for a three-year period) help employees focus on the lasting implications of their day-to-day work. Bonuses often make up from 10 percent to 50 percent of total cash compensation, putting enough pay at risk to reduce the common tendency to suboptimize for instant results.
• Long-term equity. Long-term equity in the form of stock options (the right to buy shares at a fixed price regardless of current market value) enables employees to gain wealth as the firm gains market value. The higher the price goes, the more an option is worth. Traditional accounting practices keep options off the books, expensing them only upon exercise because they cost the firm nothing until then—and may never cost it anything. This off-the-books value has made them a popular form of compensation. However, recent legislation calls for the expensing of options when offered, which may reduce their future use.

Depending on an employee’s level and role, the financial incentives from each of the four cells may vary. Entry-level employees often receive the vast majority of their total compensation in short-term cash, as in their base salary. At the most senior levels, executives often receive much of their total compensation from long-term equity.

Owning stock helps employees become—and therefore act like—owners, which provides an incentive to promote stock ownership. Companies often match employee stock purchases, or they put some or all of the retirement fund in company stock. United Parcel Service (UPS), for example, promises hourly employees that if they work steadily for UPS and take advantage of employee stock purchase programs, they are likely to retire as millionaires through stock appreciation. Many firms require senior executives to hold at least a stated minimum amount of equity, often a multiple of salary. For example, we know one CEO who had to hold ten times annual salary in equity within three years of becoming CEO. Dividing one hundred points among the four cells in table 5-2 helps you determine which type of financial compensation would be most appropriate for each employee.

Financial rewards must be linked to meeting performance standards. That is, someone who falls short of the standards must lose financial opportunities; likewise, someone who meets the standards must see financial returns follow.

Designing and delivering a total compensation program requires a compensation philosophy: What are the goals of our compensation program? What percentage of compensation should be at risk and what should be base salary? How do we want to target the compensation of employees relative to market? The resulting compensation philosophy creates measurable standards for employees to follow and uses those standards to evaluate employee performance and allocate rewards. Since people do what they are rewarded for when the standards are clear and the rewards are meaningful, financial compensation deserves the attention it receives.

Unfortunately, financial compensation has some drawbacks as a motivating instrument. It is difficult to change quickly and awkward to tie to daily performance. In addition, it tends to create feelings of entitlement. As a result, many firms are relying more and more on nonfinancial rewards.

Allocating Nonfinancial Rewards

Money matters, but other things often matter more.¹⁵ Too often, nonfinancial rewards are given out randomly or to everyone regardless of performance. When the allocation is based on meeting standards, employees focus attention and energy.

Nonfinancial rewards can include the entire array of what an employee receives from work, occupying each segment of VOI²C²E (the employee value proposition framework introduced in chapter 4) as follows:

• Vision. A strong vision gives employees a sense of pride in the firm, which is enhanced on one hand by symbols such as T-shirts or souvenirs and on the other by efforts to build the community through service and giving that are in line with the company’s vision. One firm asked people to submit photographs of employees engaged in fulfilling the vision. These were posted to communicate the vision and build morale.
• Opportunity. The chance to shine—making presentations to senior management, attending training normally reserved for higher-level staff or designed to develop new skills, engaging in conversations through forums or meals—helps reinforce people’s sense of value. Status in the firm is also a motivator, so promotions or chances for promotion provide rewards over and above any increase in pay.
• Incentive. Recognition and praise can do as much as cash—or more—to keep people motivated and confident of their value. Simply expressing gratitude is often the most important incentive of all.
• Impact. People like to make a difference. Shifting decision-making responsibilities to the employee, encouraging employee suggestions for improvement, acknowledging and rewarding good suggestions, and allowing an employee to represent the company to outside interests all build intrinsic rewards into the job.
• Community. Building community goes beyond company social events, though those can be welcome if you have a community to begin with. Consider inviting a team to participate in selecting future members. Or you might want to get together as a team for outside activities—10K runs, helping at a community center, and so forth.
• Communication. Sheer access to information is a reward. You can emphasize this by limiting some communication networks to high-performing employees so they’re informed of developments earlier than other employees.
• Experimentation. Give high-performing employees flexibility on the job. The freedom to choose hours and location of work and other working conditions is a benefit people will strive to retain.

Firms also have extensive benefits and perks programs that financially and nonfinancially reward employees. Benefits may include more traditional things like time off, sick leave, medical benefits, insurance, and retirement planning, but may also include elder care, tuition reimbursement, scholarships for children, concierge service while at work, transportation subsidies, or other services. These nonfinancial benefits become useful when they are not just entitlements that employees expect, but benefits that employees earn because they meet standards. Often, benefits become standardized across an organization, to the extent that all employees come to expect the same level of benefits. Finding ways to link benefits to meeting standards helps make them more performance-based.

Follow-up

Follow-up (i.e., feedback on prior activities and “feedforward” on what’s needed) is critical to performance.¹⁶ Without honest self-assessment, no one can make progress. Here are some of the menu choices for providing follow-up.

• Chat informally. Informal conversations are often less onerous and more effective than a formal appraisal in an office with forms and procedures. In a casual setting—playing basketball or walking down the hall or over lunch—a comment about performance can raise the issue and lead to a productive conversation.
• Supply data. People can’t fix what they can’t see. Provide charts and graphs that show revenues, profits, customer share, or other data both companywide and as far as possible for individual work units. Offer specific examples of personal behaviors that need fixing.
• Let people draw their own conclusions. Data means more when the firm shares it and asks employees what they think. When employees assess the implications for themselves, they engage more fully and work to adjust results as needed. We encourage leaders to share the problem, not the solution; then let employees cocreate a solution that works for them. Questions often generate more thought than answers.
• Explain the “why,” not the “what.” When employees understand the “why,” they generally accept the “what.” Employees who understand why something needs to happen are more willing to work to make it happen than when they’re simply told what to do.
• Do it. The most difficult part of follow-up is doing it. HR’s role is to make sure that following up with employees is part of every supervisor’s and team leader’s performance appraisal.