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For an established firm w/ no employee performance management in place, what are my logical first steps?

We are an established company w/ over 12 years in business and 500+ employees. Due to less than stellar HR (and operating) leadership we find ourselves with no effective employee performance mgmt programs or technology in place. It's almost too much to even think about where to start. But since HR now reports up to me, I have to start (I'm the CFO) and quickly. What approach would you suggest? Should I just into hiring consultants, bringing on someone full-time to run a program, look at technology solutions, get the CEO and e-staff on board? Suggestions and process are welcome.


Lisa McCormack
Title: VP, Client Services
(VP, Client Services, ) |

Hello - for a company your size, a technology solution is definitely something to consider to help administer your performance management process. However, before embarking down that path, it is important to take the time to determine how you want to measure performance. I would recommend hiring a consultant to assist you in both areas. I would be happy to speak with you further about resources in this area.

Kent Mannis
Title: Managing Editor
Company: LawRoom
(Managing Editor, LawRoom) |

First, congratulations to the company for staying in business and growing over the past 12 years. You're doing multiple things right.

So, after a decade of growing and doing what needed to be done, you're now in a position of recognizing that there's no performance management system. But what's the problem? Is it that there's (1) no performance management system or (2) bad performance?

If there's no bad performance, then maybe you don't need a management "system" to keep doing the right thing. But, if the problem is bad performance, you may want to address the bad performance before embarking on a management system.

Basically, you're in the position where you need to figure out the right questions to ask (what's the problem?) before you can fix what's wrong. It's time to work on the questions and maybe not time (yet) to get answers.

For example, what's "working right" with the company? To improve performance, reinforce and reward the successful behaviors, and try to replicate these behaviors in other departments.

If you're worried about bad performance, is it due to bad management or bad personnel? Is the problem with workers' "fit" in their positions or lack of skills? Fit problems usually require a firing/hiring solution; skills can be provided through training.

If you're simply missing managment data, figure out what performance issues you want to measure (e.g., P&L, lack of legal claims, successful completion of subordinates' performance reviews, diversity hiring etc.) and start measuring. Still, remember you're only going to manage the data you collect, and current data doesn't always directly correlate with future performance or success.

So, what's the problem with having no performance management system? Once you know that, fix that.

Mark Richards
Title: VP Operations and Finance
Company: VP / CFO - Private Company
(VP Operations and Finance, VP / CFO - Private Company) |

In response to change in our focus, I was part of a group that created a phantom stock-plan from square one.

To Kent's point, we created one because we had a problem - having only an annual plan.

While we knew the problem, the entire process started with answering the question "How do we want the team to behave?"

When I look at a new company I ask for a copy of the incentive plans, because it tells me a ton about the culture and behavior. Give people an incentive and they will do what you say to earn it.

We ended up with a list of about 10-15 items which included: Act as though they were owners, Plan with a longer cycle of time, Remain with the company, reduce working capital, build business across divisions, etc.

After meetings with management, we came up with the top 3-4 items, which basically guided us on how to build it - what to measure, term, etc.

After we built the financial model and rules, we spent a few weeks trying to "break it" with different scenarios (extreme behavior, rooting out accounting decisions that influenced results, acquisitions) and backtested against our historical data to see if the payouts made sense.

Lastly, we ran it forward several years just to see how much it cost us and cash needs.

The most important item was asking ourselves what behavior we wanted.

Hope this helps.


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