Opinion and Small Biz Advice and Small Business

LEADERSHIP: Use objective measures to evaluate employees

October 24, 2009

I don’t really care how you feel about your employees.

OK, I’ll admit that’s not completely true. I do believe an effective leader genuinely cares about his staff. However, an emotional opinion about an employee is almost always an unreliable indicator of that worker’s performance. Unfortunately, most leaders allow their emotions to play far too large a role in the management of their teams.

Just like everyone else on the planet, leaders tend to “like” or connect better with certain personalities than others. Often this connection affects their ability to objectively judge performance.

Each time I begin to work with a CEO, I ask to hear about the management team. I am trying to get a sense for who is doing well and who needs improvement.

The responses typically include, “He/She is a hard worker/is difficult to deal with/has a great attitude/tends to perform better under pressure/allows others to frustrate him/her too easily, etc.”

It’s not that these descriptions aren’t valuable. However, they are all subjective. None of them indicates how an individual is doing relative to a set of clear and measurable expectations.

Why do leaders rely so much on their emotions? There are two simple reasons.

First, leaders are people and people are emotional (and sometimes irrational). We view everything through an emotional filter and this filter plays a huge role in our decision making. If you doubt me, find someone who voted for Obama and ask for one specific reason he or she chose him over McCain. Typically, the response will not contain any details but will include the emotional word “hope.”

Second, leaders, like everyone else, are addicted to immediate gratification. When I ask a CEO why he or she doesn’t have a clear set of measurable expectations for direct reports, I typically receive the “I am too busy” excuse. What the CEO really means is, “I don’t have the discipline to do it.”

There are few factors more important to your business than the productivity of your management team. As a result, it’s critical that you have an objective plan for measuring team members’ performance.

This strategy always starts with a one-page (no more) job description that details their daily responsibilities, the major achievements you would like to see them complete (during a specific period), and the key performance indicators used to track their progress.

The type of KPIs used will vary from position to position. However, each KPI should be simple to track and measurable.

For example, let’s say you are the CEO of a manufacturing facility and you are reviewing your vice president of production. I would suggest the following types of KPIs to measure his or her performance: number of units produced, number of staff hours required to produce each unit, number of units returned, etc.

How about the head of marketing? In this case, I would want to understand the number of qualified prospects generated by your marketing efforts, the number of hits to your Web site, the number of subscribers to your e-mail newsletter, etc.

Every organization will have an individual who doesn’t have a set of KPIs naturally associated with that position. In this scenario, you will need to get creative. For example, consider the director of human resources. In this case, you could start by measuring turnover, the number of qualified candidates available for every open position, etc.

A good attitude, organized desk and promptness are important, but don’t rely on these factors. It’s always about the data and the data don’t lie.

It’s not enough for me to convince a CEO that setting and measuring KPIs is critical to success. I must also persuade him or her to measure employees frequently. Few behaviors hurt your credibility as a leader worse than setting an important expectation and not following up for six months.

If you tell your employees you will be holding them accountable for hitting a set of KPIs, you need to hold them accountable on a regular basis—monthly, at an absolute minimum. I recommend you begin with weekly updates.

The sign of a successful organization is one that can come close to predicting its results. Take some guesswork out of your business by setting up a clear set of expectations for every member of your team.•

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McClanahan is a business coach and inspirational speaker with ReachMore Strategies. He can be reached at 576-8492 or cjm@goreachmore.com.

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