PM绩效管理讲座

63/63SteveSherrettaTIME\@"MMMMd,yyyy"January14,2008PerformanceManagement:EnhancingExecutionThroughaCultureofDialoguePeterisChiefExecutiveOfficerforamedicalsupplymultinationalthatrecentlycraftedanewstrategytocountercompetitivethreats.Theplanstressedtheneedtocutcycletime,concentratesalesonhigher-marginproductsanddevelopnewmarkets.Fourmonthsaftercirculatingtheplan,Peterdida“walkaround”toseehowthingsweregoing.Hewasappalled.EverywherePeterturnedpeople,departments—wholebusinessunits—simplydidn’t“getit.”Firstsurprise:Engineering.Thegrouphadcutproductdesigntime30%,meetingitsgoaltoincreasespeed-to-market.Good.ThenPeteraskedhowmanufacturingwouldbeaffected.Itturnedoutthenewdesignwouldtakemuchmoretimetomake.Totalcycletimeactuallyincreased.“Ourstrategicplanmessageisnotreallygettingthrough,”Peterthought.Secondsurprise:Sales.Thenewstrategycalledforashift—emphasizehighmarginsalesratherthatpushingproductdownthepipelineasfastaspossible.ButjustabouteverysalespersonPeterspoketowasmakingtransactionalsalestohigh-volumecustomers;hardlyanyonewasbuildingrelationshipswiththemostprofitableprospects.Salesisdoingjustwhatit’salwaysdone,Peterthought.Worstsurprise:Evenhistopteam,thepeoplewho’dhelpedhimcraftthestrategy,wasnotstickingtoplan.Peteraskedateammember:“Whyareyouspendingallyourtimemakingsurethenewmachineryisworkinginsteadofdevelopingnewmarkets?”“Becausemyunit’schiefgoalwastoimproveon-timedelivery,”heanswered.“Butwhataboutcompanygoals?”saidPeter.“Wecameupwithagoodplanandcommunicateditveryclearly.Butnowhereitisn’tbeingcarriedout.Why?”Manyorganizationscreategoodstrategies,butonlythebestexecutethemeffectively.FortunemagazineestimatesthatwhenCEOsfail,70%ofthetimeit’sbecauseofbadexecution.“WhyCEOsFail,”byRamCharanandGeoffreyColvin,Fortune“WhyCEOsFail,”byRamCharanandGeoffreyColvin,Fortunemagazine,June21,1999.Imaginesomeonehittingatennisball.Whenthebrainsays“hittheball,”itdoesn’tautomaticallyhappen.Themessagetravelsthroughnervepathwaysdownthearmandcrossesgapsbetweenthenervecells.Thesegaps,or“synapses,”arepotentialbreaksintheconnection.Ifneurotransmittersdon’tcarrythemessageacrossthegap,themessagenevergetsthrough,oritgetsdistorted.Whenthathappens,eitherthearmdoesn’tmoveatall,oritmovesthewrongway.Creatinga“cultureofdialogue”Justlikeanervoussystem,organizationsalsohavegapsthatblockanddistortmessages.Thesecrettoeffectivestrategyexecutionliesincrossinghierarchicalandfunctionalgapswithclear,consistentmessagesthatrelaythestrategythroughouttheorganization.Soundsimple?It’snot.Thereasonisthatthe“neurotransmitters”inorganizationsarehumanbeings—executiveteammembers,seniormanagers,middlemanagersandsupervisors—whosejobitistomakesurethatpeople’sbehaviorisalignedwiththeoverallstrategy.Doingwhatittakestoachievealignmentisverydifficult.ItiswhatRamCharancalls,the“heavylifting”ofmanagement,andit’sthekeytoexecutingstrategy.Aswe’llseelater,thereisanimportantdifferencebetweencompaniesthatsuccessfullyalignbehaviorwithstrategyandthosethatdonot.Companiesthateffectivelyexecutestrategycreatea“cultureofdialogue.”Acultureofdialogueencouragespervasivetwo-waycommunicationswhereindividualsandgroups1)question,challenge,interpretandultimatelyclarifystrategicobjectives;and2)engageinregularperformancedialoguetomonitorbehaviorandensureitisalignedwithstrategy.ThreekeystomanagingperformanceAcultureofdialoguedoesn’thappeninstantly,anymorethanafluidtennisstrokedoes.Ittakespractice,persistenceandhardwork.Sohowexactlycanleadersensurethatstrategymessagesgoallthewaydowntheline—thatthetennisballgetshitcorrectly?Thethreekeystomanagingperformanceeffectivelyare:Achievingradicalclaritybydecodingstrategyatthetop.Manyorganizationsthinktheysendclearsignalsbutdon’t.Insomecases,managerssubordinatebroadstrategicgoalstooperationalgoalswithintheirsilos.That’swhathappenedwithPeter’stopteam.Elsewhere,topteammembersoftenhavetoomany“top”priorities—we’veseenasmanyas100inonecase—whichresultsinmixedsignalsandblurredfocus.Strategydecoderequireswinnowingprioritiesdowntoamanageablenumber—aslittleasfive.Settingupsystemsandprocessestoensureclarity.Oncestrategyisclear,organizationsmustcreateprocessestoensurethattherightstrategymessagescascadedowntheorganization.Theseinclude:strategy-centeredbudgetandplanningsessions;staffandteammeetingstodiscussgoals;performancemanagementmeetings;andtalentreviewsessions.Dialoguedrivesalltheseprocesses.Eachrepresentsa“transmitteropportunity,”wherestrategicmessagesareconveyedandbehaviorisalignedwithgoals.Aligninganddifferentiatingrewards.Leadersmustmakesurerewardsencouragebehaviorsconsistentwithstrategy,whichsoundseasybutisn’t.Differentiationisaboutmakingsurethatstarsgetsignificantlymorethanpoorperformers.Butalmosteverywheremanagersdistributerewardsmoreorlessevenly.Aswe’llsee,lackofeffectiveperformancedialogueisakeycontributortodysfunctionalrewardschemes.

Welistthesethreeitemsseparatelybuttheyare,ofcourse,interconnected.Systemsandprocessesdependonclarityfromthetop.Differentiationandalignmentofrewardsdependonmanagersusingperformancesystemseffectively.Dialogueisthegluethatholdsitalltogether.Butnotjustanydialoguewilldo.Itmustbedialoguewithpurpose,focusedonperformance.LinktocompanyvaluationCompaniesthatmanageperformancewell—GeneralElectriccomestomind—havehighermarketvaluations.Why?Because,moreandmore,institutionalinvestorsviewstrategyexecutionasavitalfactorinfluencingstockprices.Justafewyearsagoinstitutionalinvestorsreliedalmostexclusivelyonfinancialmeasuresforcompanyvaluations.Now35%ofamarketvaluationisinfluencedbynon-financial,intangiblefactors,accordingtoastudybyErnst&Young.BasedonastudyconductedbySarahMavrinacandTonySiesfeldfortheErnst&YoungCenterforBusinessInnovation.ThestudyshowedthatBasedonastudyconductedbySarahMavrinacandTonySiesfeldfortheErnst&YoungCenter

1.AchieveRadicalClaritybydecodingstrategyatthetopThefirststepinsuccessfullyexecutingstrategyisachievingclarityonthetopteam,whichisfrequentlythesourceofgarbledsignals.LackofClarityattheTopArecentHayGroupstudyHayGrouppartneredwithRichardHackmanofHarvardHayGrouppartneredwithRichardHackmanofHarvardUniversityandRuthWagemanofDartmouthCollegeFigure1:OrganizationalClimateandTeams58%18%Figure1:58%18%Figure1:Measuresorganizationalclimatedimensionsforoutstandingtopteamsvs.typicalones.Foreachdimensionofclimateweaskedhowtheteamwasperforminginrealityandhowitshouldbeperforming.Thenwemeasuredthedifferenceor“gap”intheiranswers.Gapsover20%hurtperformance.The“clarity”gapfortypicalteamswas58%comparedwith18%onoutstandingteams.[ChangeHay/McBerto“Source:HayGroup,Inc.”infinalversion]AndaLackofClarityBelowWorkersatlowerlevelsstronglyfeelthislackofclarity.Figure2looksatsatisfactionlevelsforworkersplanningtoleavetheirorganizationswithintwoyearsversusthoseplanningtostaylonger.Thisstudyshowedthatakeyreasonpeopleleavetheirjobsisthattheyfeeltheircompanieslackdirection.Evenamongemployeesplanningtostaymorethantwoyearsattheircompanies,only57%felttheirorganizationshadaclearsenseofdirection.Figure2:KeyreasonswhyemployeesleavetheircompaniesTotal%SatisfiedSource:HayGroup,Inc.TheresultsarefromourEmployeeAttitudeSurvey,whichsampledsome300companiesrepresentingmorethan1millionworkers.Oursurveyqueriedmanagement,professionals,salespeople,informationtechnologists,andclericalandhourlyworkers.The“gap”referredtointhetableisthe“satisfactiongap”betweenworkersplanningtoleavewithintwoyearsandthoseplanningtostaylonger.Satisfactionwith:Employeesplanningtostaymorethantwoyears(%)Employeesplanningtoleaveinlessthantwoyears(%)GAP(%)1.Useofmyskillsandabilities83%49%34%2.Abilityoftopmanagement74%41%33%3.Companyhasclearsenseofdirection57%27%30%[NOTE;HIGHLIGHTSECTION3;MAKEITPOPGRAPHICALLY]ClaritymattersWhydoemployeescraveclarity?Thinkaboutit.Whatcouldbemoredemoralizingthantherealizationthatyourhardworkisnotcontributingtooverallcompanygoals?Employeeswanttodothe“right”thing,buttheycanonlydosoiftheyknowwhattherightthingsare.Unfortunately,aswesawinouropeningvignette,companiesoftendon’tcommunicatestrategicgoalseffectively.Anoilrefineryclient,forexample,setastrategicgoaltocutcosts.Toseehowwellthemessagehadgottenthrough,anoperationsteamleaderheldastrategydecodesessionwherehequizzedhisteammembersonwhattheyfeltwasthechiefpriority.Tenteammembersproducedfourdifferent“top”objectives,includingcost-cutting,safety,environmentalcomplianceandreducingsalesprocessingtime.Themessagehadn’tgotthrough.Theteamleadercalledhisteamtogetherandcreateda“transmitteropportunity.”“Don’tyouguysrealizethatifwecan’tcutourrefiningcostsbythreecentsagallon,they’regoingtoshutusdown?”hesaid.“Isthatallyouneedustodo?”repliedtheteammembers,takenaback.Unitedbyacleardirectionandsharedownershipofthecause,teammembersenthusiasticallycutcostsbyfivecentspergallonoverthefollowingyearwhilecontinuingtomaintaingoodsafetyandenvironmentalrecords.NarrowingprioritiesHavingtoomanyprioritiescanleadtolackofclarity.AeroMexico,forexample,hadworkedwithastrategyconsultingfirmthatdelivereda249reportlistingkeyperformanceindicators(KPIs)formeasuringprogressbytheenterprise.ThegoodnewswasthattheKPIsgavethetopteammetricsformeasuringsuccess.Thebadnewswasthattherewere100ofthem,andtheyweren’tprioritized.“Itwasclearthatexecutionwouldsufferunlessweidentifiedthemostimportantones,saysAeroMexicoCEOArturoBarahona.“Sowediscussedwhichonesconnectedmostdirectlywithourstrategicprioritiesandwherewewereinthebusinesscycle,andeachteammembersettledonfivechiefgoals.”Bygainingclarityonkeyobjectives,theteamgreatlyincreasedtheoddsthatsignalswouldtransmitclearlydowntheline.Gettingbuy-inatthetopHayresearchonteamshasshownthatit’snotuncommonforteammemberstonodtheirheadsinagreementwhennewstrategiesaresetinmeetings,thengobacktotheirdivisionordepartmentandcarryonexactlyastheyhadbefore.Ineffect,theyendupsabotagingtheplan.That’swhygainingbuy-inisessentialtoeffectiveexecution,anddialogueiswhatmakesithappen.IBMcreatedanexecutiveteamconsistingofsixPh.D-leveltechnicalleadersatanappliedresearchunit.Theirmission:buildstrongrelationshipswithtopresearchuniversitiessothatIBMcouldrecruitinnovativescientistscapableofdevelopingbreakthroughproducts.TheproblemwasthatthePh.Ds,allworld-classscientists,wereusedtocompetingforresearchdollarsanddismissingeachother'sideastoadvancetheirown.Gettingthemtoworkjointlyandbeheldaccountableforbusinessresultswasgoingtobeverydifficult.Inthefirstgroupmeeting,thevicepresidentsimplyassignedaccountabilitiestothevariousteammembers."Icouldseethescientistsdiggingintheirheels,saysHarrisGinsberg,aninternalleadershipconsultantwhoattendedthemeeting."Noonewasgoingtodictatetothemwhattheyshoulddo."Evenifthey'dsaidyestotheVP'sdirectives,addsGinsberg,theywouldneverhavefollowedthrough.Ginsberg,whohelpsIBMbusinessunitsclarifyandexecutestrategy,knewthekeywastogetthescientiststalkingtoeachother.Sohecoachedthevicepresidenttochangeherbehaviors.Ratherthanhandoutdirectives,hesuggestedwaysshecouldstimulateteamdialogueabouthowtomeetobjectives.Ginsbergalsocounseledotherteammembersabouttheneedfora"consensusprocess"onaninterdependentteam.Theyall"got"it.AtthenextmeetingtheVPsaid,"Ourmandateistocreatebreakthroughproducts.Withoutaccesstotalentatthetopuniversities,wewon'tsucceed.Howarewegoingtogetit?"Atfirst,Ginsbergrecalls,shemetsilence.Finallyoneteammemberraisedherhand.Shewaswillingto"getouttheretotheuniversities,andbemorevisible,gooutwiththerecruiterandtheseniorhumanresourcespeople,"saidGinsberg.Shealsoagreedtohelpsomeup-and-comingscientistslearnhowtodeveloprelationshipswithuniversities.Asecondteammembersaidhewould"helphermakesomecalls."Theicewasbrokenandalltheteammemberseventuallytookongroupresponsibilities."Itwasallaboutdialogue,"saysGinsberg."Untiltheindividualleadersembracedtheunifyingelementsofthestrategyforthegoodoftheenterprise,theyonlyattendedtotheirownmission.Thedialoguehelpedthembuy-in,agreetosomesharedactivities,andbegintoworkmorecollaboratively."2.SetupsystemsandprocessestocreateclarityWhyisexecutingstrategysodifficult,evenwhentheplanisclear?Becausegoodexecutiononlyhappenswhenemployeebehaviorisalignedwithstrategy.Andmanymanagerscan’t,won’tordon’tcreatethe“transmitteropportunities”requiredtogetpeopletodotherightthings.Managers:can’tbecausetheydon’tknowhowtotalkwiththeirsubordinatesaboutchangeand/orpoorperformance;won’t,becausetheyfindituncomfortabletogivecandidfeedback;or,simplydon’trealizethatsuccessfulstrategyexecutionwillneverhappenwithoutongoingperformancedialogue.Partofthesolutiontothisproblemiscreatingsystemsandprocessesthatforceperformancedialogue.GeneralDynamicsDefenseSystems(GDDS)inPittsfield,WhatGDDSdidIn1999the$200millionplusdefensecontractorchallengeditsemployeestoimprovethecompany’snegotiatingleverageonbids,andtherebyincreasemarginsandprofitability.Toaccomplishthisgoal,seniormanagementdirectedalldepartmentstochaseoutcosts,andcreatednumerousprocessestotransmitthecost-cuttingstrategydownthemanagerialranksrighttotheshopfloor,whichiswheretheyfeltmanyofthebestcost-cuttingideaswouldcomefromCarmenSimonelli,directoroffacilitiesandsecurity,sayshisdepartment’sgoalwastopushlaborcosts5percentbelowbudget,witha“stretch”goalof6percent.Thatwasambitiousgiventhatdirectappliedlaborcostshadbeenrunning10-15percentoverbudget.ButSimonelli’steamslashedappliedlaborhourstoanunthinkable20percentbelowbudget.Annualsavingsamountedtoabout$440,000ona$2millionbudget,ornearly$10,000perworker.Howdidtheydoit?Thekey,Simonellisays,wastheprocessesthecompanyputinplacetoenhancedialogueandcarrythemessagetotheshopfloor.Forexample:TheLearningMapThecompanymadeiteasyforemployeestounderstanditsbroadgoalsbycreatinga“learningmap,”whichgraphicallyoutlinedhoweachdepartmentandteamlinkeddirectlytocoreobjectives.Allemployeessawataglancehowtheirjobsfitin.SupervisorsandassemblersinSimonelli’sgroup,forexample,couldreadilyseethatbyreducingappliedlaborhoursinaproject,GDDScouldincreasemargins,shortendeliveryschedulesandraisethechancesforwinningnewcontracts.TheScorecardManagersanddirectreportsatGDDSmeetoneononetocreateScorecards,whichsetoutfivetosevenpersonalannualgoals.Forexample,thegoalsforshippingandreceivingsupervisorTomMolleursincludedplanstocaptureallincentivepaymentsforearlydeliveryandtocutdirectcosts5%.Onceamanagerandsubordinatereachagreementgoals,theybothsigntheScorecardasifitwereacontract.Fromtheworker’sperspective,thiswasadramaticshift,saysNewell“Tom”Skinner,atthetimedirectorofproductdelivery.“Inthepastwejustsetthegoalsandbeatupemployeestotrytomakethem,buttheyprobablydidn’tevenknowwhywehadthatgoalinthefirstplace.”Scorecardsare“transmitteropportunities”thatclarifyexpectationsandlinkday-to-dayactivitytocompanygoals.Andtheywork.Molleur’sgroupendedupcuttingdirectcostsby50percent—notjust5percent.Whatwasthekeythingthatmadeithappen?Molleurspointstohisweeklyprogressmeetings.Whentheywerebehindschedule,Molleursusedthemeetingstomakesuretheworkersunderstood,throughtheLearningMapandScorecardsandotherprocesses,howmeetingorbeatingdeliveryschedulescouldincreasecompetitivenessandwinmorecontracts.Topmanagementdidsimplethingstomakesurestrategymessagesweregettingthrough.Forexamplethepresidentheldmonthly“pizzameetings”witheveryonewhosebirthdayfellthatmonth.Atthese“transmitteropportunities,”hewouldaskattendeespeopletolisttheirtopthreegoals,andtheirboss’topthreegoals.Withinmonths,everyonecouldanswerthequestions.Wheneffectivedialoguepushesstrategicimperativesdownwardinanorganization,extraordinarythingshappen.Skinnerextendedanopeninvitationtoanyemployeewhowantedtoattendhisweeklybudgetmeetingwithhissupervisors.Onedayanassemblershowedupandsaidapartdesignwasforcingassemblerstoworkbyhandwith“dozensoftinyscrews,lockwashersandnuts.”Skinnerhadtheassemblermeetwithprocesscontrolengineersforaredesign.Theresult:ajobthathadtaken12hourswascuttofour.“Thebestideascomefromthepeopledoingthejob,”saysSkinner.Oncethe“conversation”gotstarted,ittookonmomentum.Soon,peoplewerecomingintoSkinner’sofficewithoutwaitingfortheweeklytodiscussmisalignmentofstrategyandbehavior.Workersthemselveswerecreatingtransmitteropportunities!It’saboutbehaviorchangeTheprocessesGDDSinstalledforcedperformancedialogueandultimatelychangedbehaviors.Themessagegotthrough.But,likeatennisstroke,itdidn’thappenquicklyorautomatically.Ittookcoachingandpractice.Sometimesyouhavetogetitwrong,thenmakecorrectionsthroughfeedbackanddialogue,beforeyougetitright.OneNorthAmericaninsurancecompanyembarkedonanewstrategytoexpandsaleswithexistingcustomers.Thepresidentcreatedninecorevaluestatementsandbroadcasttheideasrepeatedlyorganization-wide.Soon,everymanagercouldrecitethembyheart.Employeesevenhadcardswiththecore-valuestatementsrightattheirdesks.Themessage,however,wasn’tsinkingin.Anoutsideconsultantsawoneofthevaluestatementsonanunderwriter’sdeskthatread“Neverknowinglyundersellacustomer.”Buttheconsultantlistenedtoseveralofhercallsandrealizedthatsheconsistentlyfailedtoexplorecustomerneedsortrytoup-sell.“Thecompanyhadtoldherwhattodo,butdidn’tfollowthroughwiththenecessaryrationaleandappealsthatwouldresultinbehaviorchange,”saystheconsultant.“Asaresult,herbehaviorwasoutofsyncwiththecompanystrategy.”Sotheinsurerputtogetheratrainingsessionandcoacheditsunderwritersonwaystoexplorecustomerneedsandbroadenthesale.Whentheconsultantvisitedthesameunderwriterafewmonthslater,henotedthatshewassendingbirthdaycardstocustomersandcallingduringtheyear—notjustatrenewaltime—toidentifyunfulfilledcustomerneeds.“Itwasonlyafterrepeateddialogue,includingfeedbackandcoaching,thattheunderwriter’sbehavioralignedwithcompanygoals,”explainstheconsultant.Figure3:Thecoachingstyleontopteams[EDITOR’SNOTE:Verticalor“Y”axisneedstobelabeledas“Percentindicating”Cutline:Teamsthatrelyona“coaching”managerialstylegetbetterperformance—percentageofteammemberswhoobservedtheteamleaderusinga“coachingmanagerialstyle.CreatingopportunitiestotransmitstrategydownOrganizationscommittedtoexecutingstrategydeviseinnovativewaystomakeconnectionsandcirculatekeymessages.Alberto-CulverNorthAmerica,the$600milliondivisionofa$2.5billioncompanywhoseprofitstripledin1994-2000,chose70“growthdevelopmentleaders”(GDLs)fromalllevelsofthecompanytocreateclarityaboutstrategy.Onestrategicgoalwastorecruitbettertalent.TheGDLsmovedthroughtheorganizationtoseewhatpeoplewereactuallydoingtomeettherecruitmentobjectives.Theyfoundseriousdisalignmentbetweengoalsandbehaviors,saysJimChickarello,groupvicepresidentofworldwideoperationsandoneoftheGDLs.Forexample,whenjobcandidatescameinforinterviews,nobodygavethemabasicoverviewofthebusiness,Sometimescandidateswouldbeleftstandingaroundbecausehand-offsbetweenvariousinterviewerswerepoorlycoordinated.Andnoonehadconsolidatedinterviewerevaluations,sotherewasnocentrallocationwhereAlberto-Culvermanagersseekingnewpeoplecouldgetasnapshotofallcandidatesthecompanyhadinterviewed.ThetopteamandtheGDLsdevisedaplanandcreatedsimplesystemstocarryitout.Forexampletheycreatedformsoutliningan“agenda”forcandidatesthatspecifiedwherehand-offstookplace.Nomorewaitingaround.TheGDLsdevelopedtake-homematerialssothateverycandidatenowgetsathoroughcompanyoverview.Finally,thegroupcreatedinterviewer-reportformsthatmustbesenttothemanagerwhomightultimatelyworkwiththecandidate.Asaresult,Chickarellosaysthecompanyslasheditsopen-jobrateinhalf,from10percentto5percent.“Hand’s-off”managementmeansnotbeing“on-message”Foryearsexpertshaveemphasizedtheimportanceofdialogueinperformancemanagement.Buttoomanymanagersavoidit.Oneveteransaysannualperformanceappraisals“arelikedeliveringanewspapertoahousewithagrowlingdog.Youthrowthepaperontheporchandgetawayasfastaspossible.”“Managersdon’twanttodealwithconfrontation,”saysCharlotteMerrell,seniorvicepresidentforBoston-basedJackMortonCompany,aleaderineventmarketing.“Evenwhenemployeesarenotdoingtherightthings,they’reusuallyworkinghard.Managersareconcernedtheymightdemoralizetheemployeeorcausethemtoleave.”Infact,theexactoppositeistrue.Employeesgetdemoralizedwhentheydon’tgetcandidperformancefeedback.Whenitcomestoannualperformancereviews,theissueisnotwhatgoesunsaidonthedayofthereview,butwhatgoesunsaidtheother259workingdaysoftheyear.Ironically,withtherightkindofperformance-baseddialogue,managerscouldeliminatetheonerousannualperformancereviewaltogether.Inatruecultureofdialogue,feedbackisgivencandidlyandconsistentlyinsmalldoses—likeanIV—andtheannualreviewbecomesanon-event.Don’toverlookthepeoplefactorInsum,strongexecutionoccurswhentopmanagementcreatesperformancemanagementsystemsandprocess(“transmitteropportunities”)andensuresthatlinemanagersaretrainedtousethem.Companiesoftendoagoodjobwiththeformer,butunderestimatetheimportanceofthelatter.Manymanagersgotwheretheyarethroughintellectualandtechnicalabilities—notthroughtheirpeopleskills—andneedhelptobecomeeffectiveperformancemanagers.Inparticular,theyneedtheskillstohelpmakethosetoughperformancereviewsessionsgomoresmoothly.Butthegoodnews,accordingtoLindaJohnston,vicepresidentforhumanresourcesatBerkshireBankinMassachusetts,isthat“performancecoachingisnotrocketscience.Withpractice,mostmanagerscanbecomequiteadeptatit.”(Seesidebaronpagexxforadviceonwhatmanagersneedtodotodeliverperformancemessageseffectively.)3.MakingrewardscountStrategyandexecutionsignalsgetdistortedwhentopteamslackclarityandwhenmanagerslack—ordon’tusecorrectly—systemsandprocessestoforceperformancedialogue.Wrong-headedrewardpoliciescompletethetriple-whammythatcripplesstrategyexecution.AligningRewardsWithStrategyItsoundsobviousthatrewardshavetobealignedwithstrategy.Infacttheideathatacompanywouldrewardbehaviorthat’s“outofsync”withthecompanystrategyseemsludicrous.Butithappensallthetime.Thereasonisthatcreatingrewardsystemsiscomplex,andthecriticalimportanceofreward,whichisjustonepieceofthestrategicequation,isoftenoverlooked.Ahealthcareinsurancecompany,forinstance,wantedtoimprovecustomerservice,soitinvestedheavilyinaprogramtotraincustomerservicerepresentatives.Therepslearnedbettervoicetechnique,interviewingskillstoferretoutcustomerneeds,andupsellingskills.Butthecompanykeptthesamerewardsystemasbefore,basingincentivepayonthenumberofcallscompleted.Whenmanagementgotitsfirstsetofcustomersatisfactionsurveys,theywerebleakreading.Customerwidelyagreedthatalthoughthestaffwascourteous,itwasremarkablyunhelpfulinresolvingproblems.Why?Because,asonerepsputit,“Ifwespendmorethanfourminutesonacallwewouldnevergetourbonus.”Thestrategyrequiredthatrepsengageinlonger,morein-depthconversationswithcustomers.But,asthereppointedout,thedysfunctionalrewardsystempunishedrepsfordoingso.BeforeAeroMexicohadclarifieditsstrategy,ithadarewardschemethatunintentionallyrewardedthewrongbehavior.Pilotsgotmeritpaybasedonon-timearrivalrecords.ThisincentivehelpedgiveAeroMexicothebeston-timerecordofanyairlineinNorthAmerica.Butthisgoodoutcomecamewithunintendedconsequences.Pilotssometimesleftthegatebeforescheduleddeparturetimestoensuretheirbonuses,leavingpassengersstrandedandangry.AeroMexicolaterchangedthekeygoaltooverallcustomersatisfaction,withon-timearrivalasjustonecomponent.Continualdialoguepreventssuchmissteps.DifferentiatingrewardsStandardmanagementtheorysayshigh-perf