This part of a series of articles called “Employee #12345.” This series is designed to point out how MBM differs from other management philosophies from an employee standpoint. While not a comprehensive view, this series is designed to provide a personal view of how the MBM philosophy differs from more traditional ways of running a business. As with all posts, keep in mind this is my viewpoint alone, and I’m not a guru.

Supervisor: Thanks for stopping by Employee #54321. Here’s your performance review.

Employee #54321 sits in stunned silence.

Supervisor: I know you did a couple of special projects that our review process doesn’t include — like the mentoring program and hiring committee work — but my hands are tied. Your numbers just don’t stack up to the other people with your job title this year.

Employee #54321 sits in stunned silence.

Supervisor: Don’t worry. I know you’re a good employee. I’m working to get your job title reclassified so we don’t have this type of thing happen in the future.

Traditional companies can treat employees like numbers when it comes to their performance reviews. Here are a couple of common practices that  can have that effect:

• Performance reviews are a one time event (usually on a rigid schedule).
• Performance reviews are largely based on a single dimension assessment of whether someone met, did not meet or exceed expectations.
• Those responsible for giving performance reviews have to compare everyone internally by rankings.
• Performance review forms are widely standardized (i.e., an accountant and a machine operator have the same form).

Employee #54321′s frustration largely comes from a situation where performance reviews are based on internal comparisons and have been overly standardized.  (Employee #11234 was featured in another post addressing the other two bullet points listed above). Some of the downsides to forcing annual reviews to have internal comparisons include:

• Losing touch with the reality of market competition. What if compared to the industry you have most employees who are far above (or far below) the typical contributor?
• The incentives may cause a lack of initiative in areas that may create value but don’t contribute to pre-mandated performance measures. Why would Employee #54321 agree to take on special projects in the future?

Compound the idea of internal rankings with overly standardized forms and employees like Employee #54321 may become extremely demotivated. Not only are the special project contributions being overlooked, but the standardize reviews are penalizing her. Employee #54321′s supervisor feels trapped as well because a high performing employee is going to get a bad review. It’s a double whammy that demotivates employees and limit’s the supervisor’s abilities to motivate and retain great employees.

So what would Employee #54321 experience if she was in an MBM organization? Well, she might find on the surface that her supervisor does things similar to her past experiences, like annually sitting down with her to take a big picture look at how the year has gone. What she’ll find is some major differences in approach. For instance, her supervisor will have detailed feedback, using many different sources of data (like her RR&Es, feedback from people all around Employee #54321, as well as the supervisor’s own observations and whatever else helps form a reality-based view of Employee #54321′s performance). Instead of Employee #54321?s supervisor just filling out a form, Employee #54321 will get an annual review that is personalized. 

Employee #54321′s performance isn’t based on a forced internal ranking — instead her supervisor will use an approach that considers many factors, including:

• The MBM Guiding Principles as a critical part of assessing Employee #54321′s performance. The MBM Guiding Principles are expectations for all employees in MBM organizations and must be included in the performance review.
• Personalized measures (both quantitative and qualitative) that have been clarified during the RR&E Process.
• “Economic analysis and 360-degree feedback should be used to understand his or her contribution to long-term results. This is to ensure the best information available is used to appropriately recognize both positive and negative contributions” (The Science of Success, 153).

Like many of the topics examined in this “Employee #12345″ series, instead of viewing performance reviews as a one-time-one-size-fits-all-process, MBM organizations consider individuals. I don’t want to mislead you, there are some forms involved in most annual reviews in MBM organizations. The difference is MBM organizations allow for personalization on the forms and supervisors are asked to use their judgement when using standardized forms. Sometimes it makes sense to use standard forms, but when it doesn’t, supervisors have options. This approach is quite different from standardizing a form to use for every employee in the business. It’s likely Employee #54321′s experience would have included the extra projects and mentoring because her supervisor would have had the option to include them. Also, it’s likely Employee #54321′s RR&E would have been adjusted to account for the special projects. So her expectations would have been different than they were previous to taking on those projects.

I’ve found my annual reviews to be useful — sometimes exciting, sometimes painful (not overly so), and sometimes a little of each, but always useful to my growth. It’s not easy work for a supervisor to approach annual reviews this way. The payoff can be huge in terms of helping direct reports increase their abilities to create value in the long run. MBM organizations are not perfect, but the likelihood of useful annual reviews increases significantly when taking this approach.

What’s been your experience with annual reviews? Does my experience reflect what you’ve experienced with performance reviews? Let me know what you think in comments.

Employee #12345

This part of a series of articles called “Employee #12345.” This series is designed to point out how MBM differs from other management philosophies from an employee standpoint. While not a comprehensive view, this series is designed to provide a personal view of how the MBM philosophy differs from more traditional ways of running a business. As with all posts, keep in mind this is my viewpoint alone, and I’m not a guru.

Supervisor: Thanks for stopping by Employee #12345. Here’s your performance review. Any questions?

Employee #12345: Thanks

Employee #12345 went home after his performance review and told his wife how unsatisfying it was.  He’d finished his major project for the year 3 months ago, and it was barely mentioned on the form he received. His feedback was particularly unsatisfying because he couldn’t get any input beyond the high level “you exceeded expectations.” Employee #12345 is concerned he’s not getting what he needs to build his capabilities and advance his career.    

Read the rest of this entry »

Employee #12345

This part of a series of articles called “Employee #12345.” This series is designed to point out how MBM differs from other management philosophies from an employee standpoint. While not a comprehensive view, this series is designed to provide a personal view of how the MBM philosophy differs from more traditional ways of running a business. As with all posts, keep in mind this is my viewpoint alone, and I’m not a guru.

Earlier this week, I wrote about Employee #12345′s experience with rules. In this post I use Employee #54321 to show another example of what employees may experience in traditionally managed companies when it comes to rules and compare it to an MBM organization.

Employee #54321 dreads going to work. He’s been a member of the organization for the past 3 years and has done the same exact thing every day of work for 2.5 years. Employee #54321 has stopped talking to his mentor because she recommended that he try new things. She said, ”Find a way to get your work done faster and better. It will make things more interesting and get you noticed.” Employee #54321 did exactly that and learned a couple of lessons the hard way:

• Trying new things (even small things) without approval will get you in trouble.
• Approval requires 15 steps — several which are unclear to him and his boss.
• Trying new things is not worth it. Finding a new job is less trouble.

Employee #54321 feels like he has been labeled a trouble-maker. His attempt to improve the way things are done was completely mis-interpreted. He’s been looking for a new job because he feels as if he’s just work-zombie that follows the same well-trod path every day. Employee #54321 worries that he’s actually losing some of his mental abilities because his brain shuts off the moment he gets to work station. Read the rest of this entry »

Employee #12345

This part of a series of articles called “Employee #12345.” This series is designed to point out how MBM differs from other management philosophies from an employee standpoint. While not a comprehensive view, this series is designed to provide a personal view of how the MBM philosophy differs from more traditional ways of running a business. As with all posts, keep in mind this is my viewpoint alone, and I’m not a guru.

Most people get a copy of the rules when they start their job. It could be a code of conduct or something similar. Then, as their time with an organization continues, they get more rules. It could be standard operating procedures or direct orders from supervisors or team/job specific rules. Today I’m going to describe one extremes using our fictional  Employee #12345 (and later this week I’ll have Employee #54321 with another extreme).

Employee #12345 is frustrated with her boss and her boss’s boss. She and co-worker have had several “misunderstandings” or “differences in opinions” that resulted in someone up the food chain taking sides. Employee #12345 meets regularly with her mentor to discuss how to handle tough work situations and the conversations have started to regularly focus on the same complaints:

• One person does one thing and it doesn’t matter. The other person does the same thing and gets taken to task for it.
• The boss is constantly choosing sides — more energy is spent being friends with the boss than getting things done.
• Employee #12345 dreads going to work because she feel like she is at the whim of her supervisor, her co-worker and fate when it comes to resolving this situation.

Employee #12345 feels like she used to be a great employee. It wasn’t until this co-worker came along that the time it takes her to get things done has doubled. If only Employee #12345 could let go of the fear and guessing games, she could focus more on getting things done.

Fearful guessing games describes a circumstance that can arise when the rules of the organization do not apply the principles of the Rules of Just Conduct.  For instance, Employee #12345′s organization doesn’t have the rules written down anywhere. They are verbal, based off of what the big boss says and constantly changing. This creates a situation where there are rule makers and “the rest of us” (or “Employees #12345″s instead of individuals). What are some lessons from the Rules of Just Conduct? Read the rest of this entry »

Here are a couple of specific notes about the care and upkeep of this blog. I’ll be taking a vacation this week with little or no access to the Internet. If you leave comments that require moderation, there may be a delay.

I want to take a moment to thank those of you who have continued to read, email and comment as the posts have gotten sporadic lately. The regular blog staff has dwindled to one (me) and the sporatic blogging is a result of prioritization, not a desire to shut down. I appreciate those of you who emailed or called to inquire about the status of the blog.

While I have access to general site analytics, your emails and comments have been one important way I can show indications of the blog being valuable to others. If you have found the blog contributes to your growth in understanding MBM and would like to see more time and effort devoted to making it better, I would appreciate a comment or email with a little detail about how the blog has helped. This will help me focus my current input and make decisions about future investments in the blog.

“Learning More about MBM Principles from the News” posts use specific news stories to try and prompt readers to identify consistency (or lack there of) with MBM principles. 

I’m sure by now that many of you have heard about “Bountygate,” and I thought it might be an interesting chance to identify and discuss some mental models. To get a high level summary of what is going on, read the article “NFL hammers Sean Payton, Saints, Greg Williams for bounty scandal.”

I encourage you to use the comments section strictly as a way to think about the MBM mental models we can see illustrated in this case about organizational management. In other words, instead of focusing on what team is good or bad, whether the punishment fits the crime, or other potential emotionally charged topics, focus on:

• What mental models could be at work in how management is dealing with the situation,
• What MBM mental models could be helpful for people making decisions in this situation, and
• What MBM mental models we can learn more about through this piece of sports news.

Twenty years ago today, the world lost a great thinker and a great advocate for economic freedom: Friedrich Hayek. If I could have coffee with any economist who has every lived, it would be him. Below you’ll find a couple of links to a few things worth reading either by Hayek or about Hayek.

• Cartoon “Road to Serfdom” and the “Condensed Road to Serfdom“
• Cafe Hayek’s Quotation of the Day is from Hayek’s Fatal Conceit
• Here’s a short bio and here is a list of his major works on a timeline
• Here is his lecture from the Noble Prize ceremony (The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1974)

What other works would you recommend to folks who are trying to learn more about Hayek? What thinkers would you most  like to have coffee with?

This part of a series of articles called “Employee #12345.” This series is designed to point out how MBM differs from other management philosophies from an employee standpoint. While not a comprehensive view, this series is designed to provide a personal view of how the MBM philosophy differs from more traditional ways of running a business. As with all posts, keep in mind this is my viewpoint alone, and I’m not a guru.

For a time while I was in college, I worked during summers and breaks at a company that dealt with finances, which required a large amount of documentation and detail-oriented work. When I was hired, it took more than four weeks to get my trained up on the basics. I recall the training being boring and focused on having everyone doing things exactly the same way. My main goals were to be the best and get the training done as quickly as possible.

Much to my dismay, the boring part didn’t go away for me. While I enjoyed interacting with the customers, I was not suited for the repetitive nature of the work. On more than one occasion I asked for additional work (not to change work, just get more work) and the response every time varied – but had the flavor of “just do your job.”

Now I was never explicitly told what they meant by “job,” but I knew from the people around me that there was a specific list of tasks/duties that someone in my position was to do. It was based on some unpublished list. Until I moved positions or showed I couldn’t handle something on the list, I was to just do “the list.”

Our fictional Employee #12345 probably has some of the same experiences when it comes to answering “what is your job?” They’ve been given the message (explicitly or implied) that the job is a list of things to do — no more, no less. What does this mean for Employee #12345?

Read the rest of this entry »

 
see more Funny Graphs

Before you read below, take a moment to ask yourself, “Does management matter?” Below is a personal take on how I came to believe management matters — in terms beyond profit or scarce resources. I hope you form your own opinion before reading mine. Let me know what you think in the comments.

Lately I’ve run into a few old friends from grad school — mostly economists. They’ve been amazed at my ongoing and growing fascination with management. These questions have caused me to examine why I care so much about management. In grad school, my main intellectual passion centered around liberty (or economic freedom).  My reasons for being passionate about economic freedom then are the same as they are now: people matter.  After much study, I’ve come to believe economic freedom is the only way to compassionately promote the well being of people. We’ll never live in a utopia, economic freedom is the best system we know for creating the most value for the most people.

My passion for economic freedom led me to Market-Based Management. At first, I was way more interested in the market part than the management part. As far as I was concerned, management only mattered because good management of resources led to more prosperity for society. It increased value creation – made people’s lives better.  As a result I was happy to teach the ideas of a free society and leave the management aspects to the management people. The better we use our resources the better it is for all of society… but there’s more to the story.

Check out the rest of the story after the jump.

Read the rest of this entry »