One of the most important jobs of an effective owner or manager is to ensure he runs a highly accountable operation. By accountable, I mean where every employee knows exactly what is expected of him or her in his or her role, has the tools and training to perform that job at a high level and then, most importantly, the manager holds each employee accountable to those expectations.
It sounds easy, right? Lay out expectations clearly and objectively. Train people, encourage them along the way and then hold them accountable. If it is so easy, why does it only occur in those few highly successful companies in our industry?
Where is the disconnect for most companies? The reasons vary, but the following is a list of culprits.
No Objective Performance Statistic For Every PositionI heard years ago from a highly respected sales management consultant - Harry Friedman of The Friedman Group - that if you can’t attach a performance statistic to an individual job, than it is really not a job. The broader point was you have to manage (hold people accountable) on statistics, which are usually very objective, vs. your opinion, which is subjective. Wise counsel then, wise counsel now.
Sit down with your organizational chart of employees and for every person, say to yourself, “What is a performance statistic that would constitute success for this position?” For sales personnel and technicians, they generate sold hours and revenue. You can create an expectation there. For customer service representatives, it is easy to create a scheduled call goal. Each position needs an objective measurement for their position.
Hopelessly High Performance StatisticsI see this all the time. It is very rare that a performance statistic is set that is too easy to accomplish. On the contrary, managers frequently set performance expectations that are, at best, “aspirational.”
Actually, many times they are virtually impossible to achieve. An example would be technician performance standards. Let’s say the shop in its best month had average technician sales of $30,000. Great. That is now the expectation, plus $10,000, which now totals $40,000. The manager sits down with a technician and gives him this expectation.
In future months, the goal is missed not only by that one technician, but by every technician. Now what do you do? Fire everyone? No, you ignore the goal and now no one has an objective performance expectation. At that point, you do not have an accountable company.
Failing To Know The ScoreThis happens all the time. The owner does not track the company’s performance, much less the performance of the individuals in the company. So even if there were objective statistics in place to gauge the success of the employees and these statistics were realistic, no one knows where they stand.
Highly accountable companies have a daily, weekly and monthly tracking of key performance indicators for the company and by position. They don’t get tangled up trying to analyze each number every day or even every week. At least once a month, they stop and access the performance of the company and everyone on the team. They know the revenue for each day and sold hours generated the day before and what kind of trend that is creating for the month. They understand which techs and sales personnel had good days or tough days. Each week they look at payroll expenses to make sure they are in line with expectations.
Finally, each month they review the production of each employee against performance expectations and, of course, do a deep dive on the company balance sheet and income statement. If performance is straying away from expectations, they make corrections sooner rather than later. If you are going to have an accountable company, you have to keep score.
Rationalizing Sub-Par PerformanceMany operators in our industry are really nice people. Too nice. They come to like and have great affection for their employees. They get to know them and their families. They know when they are facing personal struggles. And then they immediately give them a mental pass when they perform their jobs below expectations.
Only the most callous manager would not take personal situations into account when reviewing the performance of an employee. I am not talking about those extreme examples when personal tragedy befalls an employee or even the days, weeks or even month when, for whatever reasons, an otherwise good employee goes through a tough patch at work. These things happen and a good manager acknowledges and helps an employee through the difficult times without clubbing them over the head with poor performance appraisals.
However, I see some managers give certain employees (or all employees) an open-ended pass on performance expectations either due to the fact they have been there forever or have or had personal challenges that affected their work. This is called “enabling” and it does not do the manager, the business or the employee any good.
If an employee is unable or unwilling to perform the job he is assigned and you have trained him reasonably well, accountable companies will move that employee into a more suitable position or move him out of the company.
Confusing Busy With ProductiveI use this phrase I shamelessly stole from Nexstar Business Coach Jim Hamilton all the time. The reason I use it all the time is I see it all the time - especially with managers. A manager comes to the office early, let’s say 6:30 a.m., and puts in 10 hours. He seems to be scurrying all over the shop, answering his cell phone, ordering parts, putting out fires, checking jobs and smoking cigarettes, lighting one with the other. The guy is a whirlwind, or so it seems.
However, the department being overseen is in decline. Sales are down and gross margins are down. Good techs have jumped ship. Of course, it is not the manager’s fault because he is exceedingly busy. If you ask the manager how he is performing, he will tell you about the amount of time he puts into the job - all the plates he keeps spinning. What is lost on the manager and the owner is the purpose of his job is to hit the performance statistics set for his department (the annual budget). As busy as the manager is, he is not productive.
When reviewing the performance of any position, don’t confuse busy with productive. Look at the result and don’t be blinded by the daily flurry of activity.
Lack Of Personal Accountability At The TopLikely the biggest barrier to having an accountable company is having a different set of expectations for the owners and perhaps a select group of company employees (usually family). The owners have no moral authority to demand a high level of accountability in any employee when they are unwilling to be accountable for the expectations they profess for themselves.
This is incredibly de-motivating for all employees when corrective action is taken against them. Employees who would otherwise flourish in an accountable environment will jump ship due to the hypocrisy. In many cases, the owners know they have no moral authority to drop the hammer and don’t even try to enforce performance standards on others. Employees are then managed on whether they “look busy.” Not good.
If you go to any successful company in our industry, you will see accountability at the top of the organization right down to the newest employee. No one is exempt. No one is above it. And no one would live without it.