Principle 4 - To improve the outcome, improve the system (Item 5)
In order to improve the outcome; improve the system and its associated
processes.
Corollary: All people work in a system: outcomes are improved when
people work on improving the system
Your performance management system must be based on an understanding
of Process Capability. That is, on what the system is capable of doing.
If it is not, then you will:
- randomly give praise and sanction in response to how the system
has allowed people to do their work
- give praise and sanction to those who do not deserve it
- fail to give praise and sanction to those who do deserve it.
Performance appraisals should be confined to appraisal of the system
and what about it most needs to be fixed.
The process capability concept has a major impact on the way company
understand and use performance management.
The performance appraisal is deeply rooted in the old thinking. It
is a simplistic solution to a complex problem. It assumes that people
are the problem — they are withholding their labor and if only
they would work harder all would be OK. The performance appraisal entirely
overlooks the concept of process capability – that to get a different
outcome you must change the system (Principle 4). It also demonstrates
a poor understanding of variation (Principle 6).
Most people perform in the `average' band of performance, fully constrained
by the system and processes within which they work. Those systems and
processes do not produce exactly constant results - they vary, and as
a result people's performance varies. Someone who does well (in the
system) one day will most probably not do so well the next day. What
is the purpose of commenting on someone's `performance' in such situations?
Remember those NRMA roadside mechanics? Should we assess each individual
on the percentage of time they responded in 60 minutes? Does it help
at all to measure this performance? Some cars are harder to fix. It
turns out the one thing customers do not want is for their car to be
towed. If you put the mechanic on a tight `time to fix' schedule and
appraise him or her on meeting it, they call for cars to be towed. After
all, they do not want to look bad just because some lousy car would
not start. It is quicker to get it towed. Which is exactly the opposite
of what the customers want.
The performance appraisal is built on the
following assumptions - all false
- Problems result from individual dereliction
of duty
- Successful work requires holding people accountable
for the achievement of measurable goals
- There is a reservoir of withheld effort that
must be coaxed or coerced out of people
- Managers can and must motivate and control
the workforce
The only reason to have a discussion with someone about performance
is to discuss what is wrong in the system and processes within which
that person works that prevents them from doing their best work.
This could include:
- problems with suppliers (including you as the manager, fellow workers,
other departments)
- impossible demands
- steps in the process
- understanding of customer needs
- necessary skills and authority
- communication bottlenecks, etc.
Usually, there is so much fear in the company that this discussion
can never truly take place.
All performance appraisal schemes result in
- hiding mistakes
- putting a positive spin on everything possible
- dissembling – or straight out lying
- cynicism
- poor morale
From a systems perspective, people have the responsibility
to manage their own part of the system through the roles, responsibilities
and jobs they are assigned. In well-designed jobs, people manage both
quality and quantity of their output. This is achieved through a combination
of designed controls including feedback, feedforward and cognition.
(These are described below in the section on `Design control'.)
Personal appraisal schemes generally pay little
heed to the complex systems that cause 80-90% of workplace problems.
The table below shows an analysis of causes of poor performance. All
are valid reasons for poor performance, yet few are considered in most
performance appraisals.
| Training & Education |
External Influences |
Morale |
Resources |
- Interactive skills
- Decision making
- Problem solving
- Business knowledge
- Product knowledge
- Customer knowledge
|
- Goals
- Reward system
- Feedback
- Supervisor
- Work load
- Job description
|
- Health
- Work conditions
- Personal concerns
- Workplace conflict
- Recognition
- Being appreciated and valued
- Job satisfaction
- Security
- Space to volunteer
|
- Supplies
- Facilities
- People
- Time
- Data & information
- tools
- Measurement
|
The necessary shift is away from blaming the person and towards working
to find solutions to the systems problems.
Unfortunately, almost everything about the business world today is
stuck in this damaging appraisal/reward, carrot and stick, incentive,
stimulus–response thinking. It is worse in the upper parts of the
companies where the rewards are so high because of the high value reward
and incentive schemes. It is now the way we do things and is probably
the biggest barrier to success.
 First, performance management
systems must be about system performance and take process capability
into account.
Second, establish a process that agrees on tasks to reach the objective
then assesses if they were completed or not.
Third, ensure that the only discussion about performance is about what
is wrong in the system and processes within which that person works
that prevents them from doing their best work. Identify problems
with suppliers (including you as the manager, fellow workers, other
departments), impossible demands, steps in the process, understanding
of customer needs, necessary skills and authority, communication bottlenecks,
etc.
Because 80-90% of workplace problems are caused by complex systems,
`human error' is much rarer than people think.
When things go wrong, you should be asking tough questions about the
system, rather than hunting for someone to blame. Ask "why"
questions, rather than "who" questions.
When things go wrong — and they will —
make no effort to find a person to blame. As Deming had it — assume
there is something wrong with the system and ask severe questions; ask
damn tough questions; ask challenging questions. As the Japanese have
it — ask "why" five times to get to five levels of system
failure.
When you hunt for scapegoats
- you tell the people in the company to look out, they may be next.
Blamed for something over which they had no control.
- you fail to fix the system problem. As a consequence, the problem
will re-occur – and some other poor dummy gets blamed.
Stakeholders should be very wary of all companies that have a culture
of hunting scapegoats. It usually means that they do not fix their problems.
In the old thinking, companies talk about their `dead wood' and the
need to trim it. In the new thinking, there is no dead wood. The only
questions relevant are "why did you hire dead wood", or "why
did you hire good wood and then kill it off". (As a small aside.
It is worth thinking about the value of dead wood. People build houses
out of 'dead wood'. In an old growth forest, dead wood is essential
for the viability of many life forms (e.g. possums, birds). Dead wood
might also be essential for the viability of businesses.)
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