Organizations looking to mesh learning and performance management can inculcate both by conducting frequent reviews that focus on opportunities for development rather than evaluation.
by David Witt
May 12, 2011
Garry Ridge, CEO of WD-40 Company, said he believes the current state of performance management in organizations today is patchy. Although there are companies using performance management to help build their organizations, the vast majority are doing only what is absolutely required. For whatever reason, these organizations don’t see the value in having a performance management system in place that enables them to develop their people.
As a result, the majority of people are going to work every day taking away from — rather than building up — their business. Low morale, dysfunctional teams and a lack of focus all convert into underdeveloped profitability and performance for the company.
“In business, we have limited amounts of time, talent, treasure and technology,” Ridge said. “A good performance management system ensures that people make good, effective use of their time; that the talent in the organization is developed; that the treasure is well invested; and that your technology is properly used to support the forward momentum of the business.”
The problem, Ridge said, is that most performance systems are used for the wrong reasons. They are arbitrary, conducted out of habit or are used just in case it is ever necessary to document evidence to fire someone. Ridge said performance reviews should be used to develop people — not to evaluate them.
“Life is about getting A’s — not some normal distribution curve. Managers need to spend less time evaluating employees and more time helping them succeed,” Ridge said, drawing from the key concepts he wrote about in Helping People Win at Work: A Business Philosophy Called “Don’t Mark My Paper, Help Me Get an A.”
Co-authored with Ken Blanchard, the book lays out the foundation of a development-focused performance management system that Ridge has employed at WD-40 for more than 10 years, including the best performance of the company’s 57-year history in 2010.
A Closer Look at WD-40
At WD-40 performance management is built on the premise that managers and employees should work together as teammates with both groups sharing accountability for the employee’s performance. It’s a partnering process that begins with creating a trusting relationship.
“When people know you are there for them, they are going to be there for you,” Ridge said. “You have to care about your people. You need to be candid with them. You need to hold them accountable, and you have to expect them to be responsible. There is a lot of trust and respect in that kind of a relationship. And with that comes the permission to use care and candor.”
According to Ridge, in a lot of organizations today people don’t believe that management means them no harm. Employees have to trust their managers. But that can only happen when managers move away from evaluating people and focus on coaching and helping people instead.
At WD-40, good performance starts with planning to establish goals, objectives and performance standards.
“People need to know what is expected of them,” he said. “All good performance starts with clear goals. If employees don’t have clear expectations, they sit and quit, meaning they show up for work but do not give their best because they are unsure of what to do.”
Ridge said he starts the process by taking a look at the organization’s overall strategic drivers for the coming year. Usually these remain fairly constant and focus on performance metrics such as revenue growth, sales growth and profitability. In addition, Ridge and his executive team typically identify six to eight specific goals they want to concentrate on.
These goals are cascaded down to the next level in the organization as every leader has a conversation with each of his or her direct reports to establish the individual employee’s essential functions, SMART — specific, motivational, attainable, relevant and trackable — goals and values.
As part of the process, everyone at WD-40 — including new hires and promoted employees — receives a description of their essential functions with a comment that asks, “Is this the way you understand your job?” Ridge said this is helpful because individual employees know better than anybody else whether specific jobs have changed.
Then the discussion can expand to explore whether the employee is overloaded and whether he or she needs to give up or redefine certain aspects of the job. For instance, the employee may need to engage in additional training to develop more competencies.
The essential functions description is a work-in-process document that changes throughout the year. Once individuals are clear on their essential functions, three to five well-defined, short-term SMART goals are created.
“When setting goals with someone, it’s important to be certain the person knows exactly what he or she is being asked to do,” Ridge said. “That’s what establishing SMART goals does. It makes sure that people are being evaluated on observable, measurable goals, not on fuzzy, subjective expectations.”
The second key to effective performance management is day-to-day coaching, or what WD-40 calls execution. This is where a manager observes and monitors the performance of his or her people, praising progress and redirecting where necessary. At the heart of this process is a series of formal, quarterly conversations during which employees sit down with their supervisors to discuss how things are going.
Some organizations do a good job of goal setting. But it’s important to consider what happens after goals are set. Often they are filed until an obvious performance problem occurs or until someone says, “It’s time for your annual performance reviews.” Then everyone starts running around, bumping into each other, trying to find goals. The quarterly performance discussions at WD-40 Company make sure that doesn’t happen. By setting goals at the beginning of the fiscal year, leaders can use the goal sheet as a living document to guide how leaders work with individual employees to facilitate development and course correct behaviors if necessary. This system also provides the appropriate direction and support employees need as they work to accomplish their goals.
“We sit down, and the individual employee comes in and shares their quarterly evaluation with their leader,” Ridge said. “They will share where they think they are with each goal — giving themselves A’s and the occasional B. We celebrate the A’s and then take a look at the B’s. We will ask, ‘What is getting in the way of you doing great work? Is it something within the company? Do we need to get some help? Are things just crappy out there? Do we need to adjust a little bit?’”
To take the fear out of these quarterly conversations, Ridge said he makes a point to remind people that not everyone has to get an A in every goal. In fact, a B is sometimes the best thing to get in a quarterly review, because “a B says, ‘I need help on this goal,’” he explained. “I tell my people, ‘If you gave yourself a B somewhere in your quarterly review, you’ve got to know I’m on your side. Getting a B means ‘I can be better.’ It doesn’t mean, ‘I failed.’
“And since I get to see everyone’s review, our employees know that if they get a B on some part of their quarterly review, I’ll be checking with their leader to see if there’s any way I can help.
“For example, I’ll say, ‘I see some of your people got a few B’s. What do we need to do to turn those B’s into A’s?’ Remember, our responsibility is all about helping people get A’s on their goals. If they aren’t getting A’s, we’ve failed.”
Performance Reviews and Learning
The final key to effective performance management is performance evaluation, which is referred to as reviewing and learning at WD-40. This is where leaders sit down with people at the end of a period of time and review their performance. Everyone at the company has to complete only one performance evaluation — their own.
“I don’t fill out people’s evaluations, nor do any of our other leaders. What we do is have a one-on-one conversation during our quarterly meeting and review each person’s assessment of himself or herself. If the leader disagrees outright with an employee’s self assessment, that’s where caring candor comes to the forefront,” Ridge said.
“When we find a discrepancy between what was agreed upon and what’s happening, we always ask, ‘What’s going on in your life and your business that is not allowing what we expected to happen? How can I help?’ No finger-pointing is tolerated. It’s a partnership. Both sides are responsible for the outcome. We don’t play the blame game, because we know we are accountable and responsible, too.
“And because we have these meetings four times a year, by the time the end of the year comes there are no surprises. You know exactly where you are,” he explained. “That process goes on around the world at WD-40.”
When leaders help people win at work, both the organization and the employees benefit.
“When employees have clear expectations, meaningful work and day-to-day support, it impacts their level of engagement,” Ridge said. “At WD-40, our engagement score is 93 percent, which means that 93 percent of our people globally get up every day and go to work doing meaningful work — work they find is adding value to them and the company on a daily basis.”
Ridge said other results from a recent employee opinion survey included responses in the 90th percentile to the following statements:
1. At the WD-40 Company I’m treated with respect and dignity — this was a no. 1 ranked attribute at 99 percent positive globally.
2. I know what results are expected of me.
3. At WD-40 Company I am encouraged to have a different point of view.
“That all finally ends up with people feeling that they belong here,” Ridge said. “People come to work and they belong. And people love to belong to something where they feel they are making a difference.”
Ridge said that when people want to be somewhere, they stay longer, think of ways to give back to an organization and grow because they invest in themselves. Both employee retention and creativity increase.
“We have a retention rate that is three times the U.S. average,” he said. “And that is fantastic. There are a lot of very positive metrics which come out of staying the course with a program like this.
“Apart from that, we just had the best year in the company’s 57-year history. And that was amazing, especially in these tough times. We just blew everybody away, and I think it was because we had this focus and an enduring culture that we will get through this and do what it takes.”
For leaders wondering if a system like this could work in their organizations, Ridge suggested asking two questions:
1. Do you believe that your biggest asset is your people?
2. Do you believe if everyone performed at a high level in the organization that business would be better?
“If the answers to those two questions are ‘yes’ and ‘yes’ and you have a chance to adopt a process with clear statistical evidence that it improves employee engagement, can improve the emotional health of the business and, on top of that, delivers immediate results, what are you waiting for?” Ridge said.