Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent

MTG - #114 Mary Simmons
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Mike: [00:00:00] The 2024 HR Benchmark Report is in, and today we're talking about performance management. So this is episode number seven out of eight in a series, where we are unpacking all of our findings from the 2024 HR Benchmark Report. If you haven't followed along thus far, I encourage you to jump back and check out the prior episodes, but this is what we're doing.

We asked, uh, small businesses and we had over a thousand responses, 1065 responses, 40 questions, five questions in each of eight areas from pre employment through post employment. Here they are. Recruiting. Benefits, Onboarding, Development, Compliance, Retention, Performance, and Post Employment. So five questions, yes or no each, do you do this best practice or that best practice?

So 40 questions in total, then we ask one question at the end. What best describes you last year? Was it a fast growth year? A growth year? Or was it zero growth? Were you flatter down year over [00:01:00] year? And then we correlate the HR best practice questions to revenue growth. So spoiler alert, uh, as you might imagine, performance management rakes really, really high, uh, in its correlation to revenue growth, but maybe not quite as high as you might expect.

And I think there's some really good reasons why, and that's what we unpack in today's episode. Thanks for joining.

Intro: Welcome to Mission to Grow, the small business guide to cash, compliance, and the war for talent. I'm your host, Mike Vannoy. Each week, we'll bring you experts in accounting, finance, human resources, benefits, employment law, and more. You'll learn ways to access capital through creative financing and tax strategies, tactical information you need to stay compliant with ever changing employment laws, and people strategies you need to win the war for talent.

Mission to Grow is sponsored by Asure. Asure helps more than 100, 000 businesses get access to capital. Stay compliant and develop the talent they need to grow. Enjoy the show!

Mike: All [00:02:00] right, we're talking performance today. So, uh, this is number seven out of eight in the employee lifecycle categories from the HR Benchmark Report. Um, uh, spoiler alert right off the top. This is, of all eight categories, this category has the third largest impact. I think before we even jump in, and I think everybody knows my guest, Mary Simmons, uh, say hi.

Hi, Mary.

Mary: Hey Mike.

Mike: If you were to ask, I think, the average person of all the categories, and I'll just read them off, recruiting, benefits, onboarding, development, compliance, retention, performance, and post employment, which would have the largest correlation to revenue growth based on implementing best practices?

My gut says, Most people would say, well, performance, right? You're managing performance. You, you're improving performance. You're managing out low performance. That would have the highest correlation, but it's number three. What, what, what, what say you?

Mary: Yeah, I mean, I agree with you. I [00:03:00] think this is where we always say this takes HR out of the cost center and into the ROI driver.

I, just think organizations don't. Focus enough on it, right? They're like, I hired this person, go, do what you got to do, right? So managing performance and continuing to manage performance is really the differentiator here, right?

This is where the organization has to say to themselves, You know, what do I want out of this individual? What are our goals? How do I tie every single individual's performance to the ROI of the organization to drive our, you know, success. So I'm surprised as well. I just think, organizations aren't focusing enough on performance.

And I think that's what the statistics are showing us.

Mike: I almost have two conclusions here. On one, I'm not surprised that it's highly [00:04:00] impactful, right? So it's number three out of the eight. So it is very impactful. And if I aggregate all of the, so again, there's five questions for each of the eight sections. So five questions in performance, I'll write them off.

Do you reward high performance with recognition and higher pay? Do you regularly communicate expectations for job performance? Do you have a formal job performance review process? Do you conduct 360 reviews with feedback from multiple team members? And do you document performance improvement plans for underperforming employees?

1065 respondents, 61 percent of zero growth firms said yes to those five questions. So five questions of all those folks, 61 percent said yes. The fast growth firms, 83 percent said yes. If I, if I, if I look at the smaller firms under 25 employees, it's 51 percent of zero growth, 80 percent of FAF growth.

That's a 28 percent spread. So it's, it is a [00:05:00] really strong correlation.

Mary: for sure.

Mike: What's just really interesting, the number one, was our topic last, last episode, when we talked about this, retention. Number two is development and then performance is number three. The conclusion I think I draw is talent wins, right?

the more talented, skilled people, and I think about a sports team, and performance management is maybe coaching. It's like, Coaching matters a whole lot. Clearly this is number three, but a great coach can't overcome poor talent, right? And so you have to be recruiting the right talent, you have to be developing the right talent, and you have to be retaining that talent.

If you can't develop and retain them, those are clearly more important than managing them. But I think, again, this is all hand in glove. These things are all related, [00:06:00] right?

Mary: It is. And I think, listen, you and I for probably the past year to two years have been talking about the war for talent. Well, you know, the economy is changing and that's going to shift, right? For sure, I think that's going to be less of an issue. And I think organizations now need to focus on the right person.

But Mike, even the right person with all the talent in the world has to be developed. We have to think about retention and we have to think about the performance and how we're going to drive and reward that performance. And listen, Rewarding performance is different for each individual. It's different for each job, industry, organization.

So, finding that special sauce. Takes a little bit of work and sometimes organizations are so busy doing their day to day, they can't focus on this section. [00:07:00] I can't impress upon everybody how important this is and it's going to get more important as, you know, you know, I, you know, the economy's changing again.

I don't think the war for talent is going to be as difficult. I think you're going to find people, but finding the best people. is always tough and then keeping them at on their A game is also difficult.

Mike: Yeah. Something else I think jumps out when I, when I read those questions for performance, do you reward high performance with recognition and higher pay? Do you regularly communicate expectations for job performance? You could make a strong case why those two questions belong in the retention category, right?

So we've already acknowledged retention was the, the five retention questions had the highest correlation to revenue growth.

Well, Reasonable to think that if you're not, if you're not [00:08:00] compensating and recognizing your highest performers, if you're not setting expectations on job performance to kind of raise the floor, Uh, the, the, the, the, your best people aren't going to want to stay, right?

Uh, winners don't want to work around losers. That may be a harsh way of saying it. There's a great, uh, Nick Saban, uh, quote on this, like, uh, people who strive for excellence, don't want to work around mediocrity. They want to work around other people who push them, steal, sharpen, sharpen, steal, right?

Mary: Oh, absolutely.

Mike: And, and so.

Uh, and so, and your best of your best, you still recognize them, whether it's through compensation or trophies and trips or just shout outs,

Mary: you.

Mike: right? So these things are beyond hand and glove. I think you could almost interchange some of these things with retention. So, uh, anything else you want to say before we jump into the actual questions themselves?

Mary: I, I, I agree with you at performance is like a water level, [00:09:00] right? So if you have a high performance level, everybody tries to get to that level. If you have a low performance level, right? Your waterline is low. It dips everybody, even your top performers. So you want to drive performance up and everybody will come up or most will come up to that level.

I agree.

Mike: Yeah, yeah, you know what, and you know, maybe, maybe folks Google it, hop on YouTube, uh, maybe, maybe you're not a Roll Tide fan, so you won't like it, but I, I, I remember I've seen this probably 10 times and I love it. Saban talks about low performers. Mediocre performers don't like perfor uh, uh, working with high performers because they're always pushing them.

And they're, it's always uncomfortable. It's like, oh, can't you just chill out, right? It's like, so mediocre players don't want to play with top performers. And the inverse is true also. Top performers don't want to play with mediocre performers because they don't want to be around and associate with people who don't strive for [00:10:00] excellence.

And they don't want to have to carry the load for other people, right? It's, it's, it really is part of a An overarching talent strategy.

Mary: Correct. It's very true.

Mike: Um, all right. That probably is probably a quarter of the talk track for question number two, about setting expectations. Let's unpack question number one. Do you reward high performance with recognition and higher pay? This feels a little Captain Obvious, right? So yeah, you should be re recognized. If it's like a sales position, higher comp is maybe going to come through through commissions, maybe accelerators.

If it's a staff job, an individual contributor, frontline job, maybe there aren't those kind of variables. There's still opportunities for bonuses. Uh, at minimum, there's the opportunity for recognition, right? If I look at the, that question, I'll, I'll take the big group and then I'll talk to the smaller employers.

71 percent of zero growth firms said yes, 89 percent of fast growth. [00:11:00] So the majority of all firms do this. And interestingly, the number, the number didn't change a bit for small firms. So this is one of those, I'd say rare categories in the survey. Firms under 25 employees, uh, responded literally the exact same percentages, 71 and 89.

Uh, uh, uh, for big companies versus small companies. So it seems that everyone gets that you should do this, yet the fast growth firms do it 18 percent more often. What, what say you?

Mary: I think this is also one of those quality things, right? So, I think the small firms are saying, they're reading that question, or they're small, you know, slower growth, are saying, I, I. Read that question. And yeah, I give, I give raises. How do you give those raises? Are you doing a performance evaluation? And listen, they don't have to be long.

Uh, we make them customized for our clients, right? So, you know, maybe on the [00:12:00] manufacturing floor, you have different core values or different skills that you're evaluating than on the management team. So that has to be correct. Even if you didn't have an evaluation, Mike, What's the talk track that the manager is sitting down and talking to the person about?

It's not just, Hey Mike, I gave you a 50 cent raise. That's going to be good, but study after study will tell you that recognition, needs to be verbalized and you need to tell them why they're getting that raise, right? So instead of just saying you got a 50 cent raise, For that moment, Mike is going to be really excited, right?

When he gets his first paycheck with that increase of pay, Mike's going to be really excited. And after that, you have lost all of the benefit of that raise with in less, you said, The reason I'm giving you a raise is I value you. You have these [00:13:00] skills and these skills that we appreciate. Here's some examples of things I've observed that were good.

Here's some areas of improvement. We're talking about performance here and driving performance. So if you don't leverage that recognition to drive performance, you have completely wasted your money. You might as well throw it out the door.

Mike: Yeah. Yeah. Give me maybe, so you and your team, you, you walk into, uh, big and small companies every day. Maybe just rattle off some of the, some of the use cases that you see, or maybe some best practices, especially the low cost to free things that you can do. Um, but also the inverse, you know, we're not, we don't want to call anybody out, but what do you, where do you see the mistakes being made?

Mary: So, uh, first I'll give you an example of a, of a mistake, and that's kind of what I was talking to. So, we had a manufacturer, and I guess the, the, when they would get, they're very cyclical, right? They [00:14:00] make, uh, parts for, um, cars. Actually, the air conditioning system, specifically. So, it's very specific, and you can imagine that they're busier.

And that's when people take vacation or they just tend to be, um, I don't know if you see it, but they're vacationing in their mind, even if they're not vacationing. So they were like, I, we can't solve to this. I don't understand. Do I need to pay them more? Mary? You know, let's do a salary benchmark. Nope.

You're paying pretty well. What's going on? So then I, we took a deeper dive into what was the performance, um, the merit increase system, what was their process? And literally they were doing exactly what I said. They were like, Hey, Micah, yeah, just gave you a 50%, you know, you know, you did, you know, thanks.

That was it. So, nobody knew why they were getting a raise, what they could do [00:15:00] differently, so then we started doing evaluations. Five questions, and that was it, right? And it was tied to the performance we wanted to drive, right? So, you can't just say, you work well with others. That's not going to help in this instance, right?

It might help with others. Sometimes their managers have a hard time finding an example. So we made it very specific for this production line, right? It was how many units per, you know, day you were producing. And they, they had those stats, they just weren't leveraging it. Now the employees went, wait a minute, you want me to work faster?

Like And I know it sounds simple, but nobody ever told them. gave them the data that the managers had. So that's an example of the specific driving performance you want, [00:16:00] specifically leveraging data and rewarding it. So that, that's, that's, uh, That's one example there. Now, when it comes to the free rewards, it's really not that difficult.

So I'll give you another example, but I'll switch it to professional services. So we support, um, um, actually an accounting firm, very successful. And, you know, these are, well paid individuals. Um, you know, the difficult thing there is again, they're cyclical, right? So very busy during tax season. Uh, and that takes a lot, you know, out of the individuals.

So what did they do there to recognize them? They started bringing in lunch and dinner cause that's how many hours they worked during, during tax season. That little bit of time, Piece of not having to pay for, um, [00:17:00] dinner and, uh, lunch. Right. They didn't, they didn't end up doing, um, they didn't end up doing a breakfast cause people were coming in at staggered times, but paying for the meals number one made everybody really happy.

And that did cost some money, but they got it back in productivity because nobody left the building.

Mike: Yeah. Yeah. Right.

Mary: Going out to have lunch and dinner, or even ordering it in. You're waiting, you're standing at the door, you're paying, paying the, you know, Uber Eats person. It, it, it drove their productivity, but people were happier.

They were like, you recognize how hard I'm working and you're, you're rewarding us for it.

Mike: Yeah. Right. I love that. I love that. I think about different job types also. Like there are some job types. It's like, you know, You kind of need to schedule the break. Maybe, maybe it's a physically demanding job. Maybe it's a mentally taxing job, but it's kind of maybe [00:18:00] monotonous. Um, so maybe, maybe my body needs a rest.

Maybe I just need to take a break from the phones because I'm hitting it hard and I need to take that break. But there's other jobs where, uh, engineering, for example, the productivity loss from, interruptions in, in, in stopping work. There's, you don't just pick up after lunch and all of a sudden you're, you're, you're right back where you left off.

There's like a long ramp time before your brain is back engaged where it was. Uh, I think things like that can just go a long, long ways, especially for certain job types.

Mary: Right, right. It's very true. And then the free, the free things that you can do is, you know, you would get, we do lunch and learns, right? So we've done it. I've done, you know, disc training just to make it fun. You can have a nutritionist come in. They'll come in for free a lot of times because they're hoping to get some business.

Financial analysts, um, financial planners [00:19:00] will come in and, you know, just do a basic, you know, money 101. That's it. A bank will come in a hundred percent of the time. I, I usually, you know, will have a full list, you know, now that we're virtual, you know, the list of, of Lunch and Learn, you know, people that I have in my network can help any of my clients.

So those are, those are the kinds of things. And the other thing you can do is survey your staff. What types of speakers would you like for a lunch and learn? Um, so we utilize the survey tool that we use to ask the employees. So you're not bringing somebody in and nobody comes in to listen to them.

Mike: Yeah, right, right.

Let's, let's move to our, you know what, before we move on, I want your thoughts on, on the pay. Um, at face value, it sounds like obvious. Oh, yeah, we hire pay, maybe with bonus incentives, commissions, whatever, to our highest performers. What, what are the, what are [00:20:00] the areas of opportunity, shall we call it?

The mistakes that you see folks making, because when you engage pretty, pretty frequently, you're doing salary benchmarking, uh, across the job families to see how they're doing. Is this an area you think most companies do a good job of, or, you know, where are the landmines here?

Mary: Yeah, I mean, I think, you know, that's usually in organizations, you know, one of your biggest costs is your salaries. So companies, I think sometimes, you know, keep those salaries too low. You're not going to attract the best talent and you're not going to retain. Now we like to do a salary benchmark. It's just that Mike, it's a benchmark, right?

So that's one piece of compensation. Yeah. It's, it's not everything. So some organizations pay a ton and they're like, why can't I keep people? I pay so much money. And we've talked about the reasons that they don't retain them and that goes long and deep. [00:21:00] Right? So salary can't be The only reward that you're giving individuals for their performance, you know, I interview people quite often.

Um, and anybody who interviews people, people don't leave solely because of money. The money cannot be there and other factors are like, how am I empowered? How am I treated? You know, uh, what are the extra things, right? Do I get a 401k? You know, things like that. So salary can't be the only thing, but you definitely have to meet that minimum.

You should be at the benchmark. My nonprofits sometimes aren't. So we try to fill in with some of the free benefits.

Mike: Yeah, I think, uh, I think sometimes folks see a benchmark and they see, Oh, this is what the marketplace is paying. Oh, that's just what I have to pay. I think you can be much more intentional about your strategies here. [00:22:00] Um, you can make a really strong case for paying significantly under market value. If you have other parts of your value prop, it could be your benefits.

It could be the flexibility. It might be that your mission is so gosh, darn good. That people are willing to commute an hour and a half to you and, and work insane hours because they believe in your mission, uh, to colonize Mars. Right. I mean, and obviously, uh, uh, uh, a SpaceX reference, but when people are so, so bought into your mission, then, you know, it's not like you want to intentionally take advantage of people.

But. There, there, there is trade offs, right? And so some people will trade money for time and flexibility, uh, virtual versus in office. The inverse is also, go ahead.

Mary: right. No, no, that's the nonprofits, right? People are, you know, I want to save people. I want to help the underserved. So, you know, it's, [00:23:00] it's both sides, right? You're, you're a leader in your industry and you better leverage that, um, culture and, you know, the mission. It's, it's, it's all of them and leverage them.

Mike: One of my sisters is an executive in the Red Cross. She's ridiculously talented. She could go make more money other places. She's bought into the mission of helping people and she loves how her work impacts lives. And I was going to say the inverse is also true, where you can pay way above market value and have really good ROI if it comes with the insistence that you're raising the bar on expectations of performance,

Mary: I agree. I agree.

Mike: And when you think, when you, and it's as simple as dividing revenue by your, your, uh, salary expense. You're, you're, you're right. And that'll, that'll tell you your productivity levels and one or two really, really, really, really [00:24:00] talented engineers can outperform a team of 10. Uh, junior engineers, right?

Cause it's not how many lines of code you need. It's how good, how, it's almost how few lines of codes do you code? Do you really need the really, really smart engineer figures out better ways to do things, right?

Mary: Agreed.

Mike: All right, let's move to our next one. Uh, do you regularly communicate expectations for job performance?

I feel like maybe this is. Well, I'll rattle off the numbers. These are lower, but they're all still high. And I'll focus here maybe on the, on the smaller firms under 25 employees. The gap is a little bit bigger. Uh, 64 percent of zero growth firms said yes. 85 percent of fast growth said yes. So it's still the majority.

It's 64 percent of even the zero growth say they do it. Um, I almost think, I think people under think this one. I, I feel super guilty even talking about this subject because I think I do a terrible job setting the expectations. You know, my team, my team members might feel [00:25:00] disappointed in how I feel about the results.

It's like, well, damn, today you're going to set the proper expectations in the first place.

Man, I think expectations are kind of everything, aren't they?

Mary: Yes. I, I agree. And how are you setting those expectations? Are you reminding people, you know, this comes up a lot when we're doing warning notices and they're like, well, they should know. And I go, well, how would they know? And they're like, well, five years ago, I gave them a job description and I'm like, Really?

Um, you know, so job expectations need to be refreshed, right? We look at job descriptions or recommend it every single year. Not that you're going to change it every year, Mike, I'm not saying that, but are we reviewing those job expectations in an evaluation? Or, you know, as we discussed, a stay interview may have something to do with that.

You know, you may bring in that job description,

Mike: Yeah,

right?

Um, what do [00:26:00] you think the best practices are? We almost don't need to, don't even need to talk about what are the, what are the mistakes? Because I think the mistakes are people just simply don't do it. I think, right? So are there, are there some ways that are better than others and some best practices for setting expectations?

Do

Mary: mean, I think, you know, we have a saying in HR, if it's not written down, it's not real. So unless you're giving a document like a job description, right? And, and it could be different than a job description in that I'd want you to give a job description, but maybe for the manufacturing floor, we actually give them something specific that says, this is how many units I'd like you to produce per hour, per day, per week, however you want to state it, right?

Uh, for professional services, right? These are, these are the, um, this is your job description, but your job expectations are, can, [00:27:00] Can and should be some additional things like, I expect you to do some networking, right? If you talk about professional services, I think most firms are going to want you to do some, some type of getting out there and listening to the trends going on in the outside world, right?

Are you, what are you doing to drive business and what does that look like? So those things need to be discussed with individuals. Um, And I think that is something that also makes you work as a team because then they, those things are tied to your goals in the organization. And instead of being a worker, now they're, you know, part of the entire machine, that entire organization, you know, driving to the goals and those goals don't have to be dollars and cents.

Cause in, in your nonprofits, it's not dollars and cents, unless you're in fundraising side of it. It's in. How many lives are we helping, right? So, um, I think that [00:28:00] performance, um, and job expectations, there's a lot of different areas that need to be reviewed with the employees. They're not going to get it through osmosis.

Don't make them guess.

Mike: you see, curious your thoughts, uh, sometimes I feel like companies try to highlight too many things. Uh, we've gotten so good at automation and, uh, KPIs and dashboards. I mean, I got, I got a ridiculous amount of detail. If I tried to read off all the, uh, all the details on my dashboards, you'd be numb within 10 minutes, probably.

Um, Do you see, do you see that as an issue where folks are trying to set expectations on too many things versus just the really the here's what's core and essential?

Mary: Yeah, I couldn't agree with you more. Um, you know, KISS comes to mind, keep it simple, stupid. Um, you know, just because if you [00:29:00] use a shotgun approach, um, you don't know, they're not going to be able to focus on all of it and they may focus on the one thing that's the weakest there. So, you know, keep it narrow, uh, and keep it simple.

You know, connected to your goals and make sure you're including the why. Why do we want you to do that? Here's the

Mike: Right. I've shared that with you before. I mean, I used to coach youth football when my, when my boys were young, and, uh, I mean, I fricking loved it and I love the intensity and getting them all fired up. And that was, that was the fun, that was the fun part. But my effectiveness as a coach changed dramatically when I actually calmed things down and explained why.

So it's not just that you want to step forward with your left foot, your head, head tucked in against the side of their body, and you're pushing with your right shoulder on that block. But when you explained why they do that, then, Oh, okay. The light bulb clicks and. It applies to youth football. It [00:30:00] applies to every, every job out there, right?

Mary: Right. I couldn't agree more.

Mike: Yeah. Next one. Do you have a formal performance review process? smaller companies 29 percent gap between zero growth and fast growth Uh, 51%, so call it half, of zero growth firms say that they have a formal performance review process, maybe challenge that, 80 percent of the fast growth firms do.

This one might be another one where you suggested, as we were talking, you know, before we started rolling today, um, our, you know, we, we mentioned this many times, this is a quantitative survey, not a qualitative survey, so we're just asking, do you do it, yes or no?

That gives us the ability to correlate responses to revenue growth. Um, but this is one that probably really matters how the quality probably matters a lot in your review process. Right.

Mary: [00:31:00] Right, and that's why this is one of the core trainings that we do for clients, right? So, no matter how many times a manager has done performance evaluations, I do feel like they need the reminder. Look, As a manager, it's very difficult, uh, to give, you know, critical feedback, but if you don't, performance will not change.

If you don't tell me I'm not doing the exact job that you want, I'm going to keep doing what I'm doing, right? And the other issue is the performance evaluation is often tied to their merit increase. So the manager says to themselves, I don't want to lose this individual. So I'm going to make sure they get the top raise.

So I'm going to just evaluate them the best, you know, higher than they really should get. And then I get to keep the person and I get to give them a big raise. I don't have to. I avoid a [00:32:00] difficult conversation. In essence, what you have done is you've taken wherever the level of that performance is, it's going to stay the same or go down.

Why would that individual change? I got a good raise and my manager said I was doing well, right? There was no critical feedback and even your top performers need critical feedback. I will, I will say, um, That your top performers will beg for, for feedback. They, they're, they want to move ahead. They want to be stronger and they want to be better at their job.

So if you don't give them critical feedback, you're not managing them. You're not helping them get to the next level. And it could be outside of the realm of the. You know, if you want to move to the next position, here's some extra things that I'd like you to do. Right? So that critical feedback could just be giving them a [00:33:00] project or some extra responsibility, but they need it.

Mike: Mary. I feel like I see some managers afraid to give critical feedback to top performers because they don't want to discourage their top performers. Um, it's like, Hey, I just want to praise them. I would, I'd be dead in the water if I lost them. Do you, do you, do you see that? And maybe what you have some coaching for. I don't, it's dangerous to only give one or the other. You got to give both, but what's your, what's your guidance here?

Mary: Yeah. So, you know, I think when we give that critical feedback to our top performers, you might say to yourself, I'm looking at that overall performance and they're stellar. But there's always something that you can say, Mike, continue to do your networking. You know, maybe we should look at some of the groups that you're in and evaluate which ones are successful and which ones you're going to and you're really not getting, you know, the referral business that you need, right?

So the [00:34:00] critical feedback doesn't need to be, Mike, you're doing a bad, you're doing really great. But in this area, you stink. I mean You know, it's, all in the way that, that you say it. and again, your top performers are top performers because they're driven and a driven individual wants to hear feedback.

It's not necessarily negative feedback. It's feedback. It's critical to their job and how they can go further.

Mike: Yeah, I think that's a really important distinction. Critical meaning it's criticality, not critical meaning you're bad, right?

Mary: Right. Yes. Sorry.

Mike: Yeah, no, I, I, but I think that's, I think, I think people think that when they hear some critical feedback, I don't want to give critical feedback. I only want to encourage people.

Well, it's the criticality of the feedback, right?

Mary: Yes. Correct.

Mike: And, and I probably overuse sports metaphors, but, um, I mean, [00:35:00] when Andy Reid's on the sideline coaching the Kansas City Chiefs, Andy Reid's not a better quarterback than Mahomes, right? I mean, but Andy Reid for sure critiques every single play, breaks down film, and literally looks at every single step and every single option and gives critical Feedback to someone who is better at that job than than he is.

That's okay to do you. It's it'd be silly not to create an environment of enthusiasm and and also celebrating the wins and whatnot. But you're, you're robbing, you're robbing that person's ability to get better. If you don't share with them that feedback.

Mary: exactly. Then even if they're a high performer, that water level is going to stay here. Don't you want it to keep rising?

Mike: Yeah. Um, let's move to the next one. It, and I know you and I, we've talked a lot about this one enough to, we have some opinions here. But here's the question. Do [00:36:00] you ever conduct 360 reviews with feedback from multiple team members? It's a 43 percent spread for under 25 employee firms, 39 percent spread for companies of all sizes.

So I think this is in the top two or three most impactful questions. We know that most, we know that most firms really don't do this. So when I see So I see zero growth firms under 25 employees. 22 percent said yes. Eh, 20, 20, 22 is probably still high. 65 percent of fast growth. I suspect even that's high.

Read between the lines of that question. What do you think people are really saying here?

Obviously it's a big impact. We'll talk about why it's a big impact, but how do you folks read the question and responded the way they did? Yeah.

Mary: Well, I think it is a little bit difficult to do 360s if you want them to be anonymous in a [00:37:00] smaller organization. So if I'm a manager of two people. And you do a 360. And to be honest with you, they're usually done anonymously. I only have two people on my team. So the two people on my team are like, well, I can't really give honest feedback on Mary.

She's going to know it's me or Joe. So I'm less likely to give, um, I think, um, you know, a truthful answer on what I think their performance is. And it's the same for my coworker. So It's a small organization. Joe's my only co worker. So if the 360 is done, um, I know it's Joe doing it on me and he knows it's me.

So it is a little difficult to do it, um, in a smaller organization if you want to keep it, uh, the responses anonymous. And personally, I think that's, um, I think that's a good thing. I think that's the way to do it because people give more honest feedback. The other thing is [00:38:00] a 360 is not a regular evaluation.

Uh, the questions need to be nuanced. They need to be specific. It's different. If you're doing a 360 on a coworker than a, than a manager, um, so they do. You know, you probably should invest some money in, in a 360, um, and have, you know, an expert help you launch it so that it's done correctly. So, I think, you know, that is a little bit more difficult for a smaller employer.

I also think it's just not as, as a well known, like, I think some people don't know what a 360 is,

Mike: Right. My interpretation is that people understand the concept. Okay, 360 degree view, we're going to have other people give feedback. I assume that they mean they get feedback from others. It's probably something a little more generic than this. You [00:39:00] know, we're not, we're not following the HR religion of this is the way a 360 is conducted, period.

I think it's probably a little looser interpretation, but the, but nonetheless, I would assume high performing companies, the fast growth. Either interpreted or misinterpreted the question to the same degree that the low performers, the zero growth firms did. And it's still a massive spread of 43%.

Mary: Yeah,

Mike: What is so powerful about 360 reviews, or at least the concept of getting feedback from not just your boss or your employees, but your peers and others in the organization you work with?

Mary: I, I think the importance is that we sometimes ignore the, um, value of having good internal customer service. Right? So I can't do anything all by myself. Um, you can't do anything all by yourself. We have to work with the others within the organization for, for me to [00:40:00] be successful and for the entire organization to be successful.

So understanding how I'm working in this. You know, cog of the wheel is very important and it's important to the organization. So again, I'll go back to, let's, let's use the top performer because I think it, it helps illustrate this point. I can have a top performer, um, and I can, you know, think of top performers at a client, right?

And they're like, he's real, they're really successful, but I don't, nobody wants to work with them. Right? It happens all the time, Mike, you know this, right? And I think everybody listening will be like, yeah, that topic. Why don't people want to work and then how we need that feedback so that we can then go to that individual and say.

I'm going to make you even more, help you be even more successful. Here's some feedback. Let me coach [00:41:00] you on it, counsel you on it, and help you move from that, you know, nobody wants to work with you. And you wouldn't say it quite that way. Um, To a more collaborative, uh, you know, communication and, and work environment.

So it's, it's very important because it's the, it's the whole organization and how everybody's working together. You can't go anywhere with one or two high performers. You need everybody to work well together

Mike: Well, and I think one of the things I like about a 360 is. It's easy for any of us to kind of fall into our, uh, positive or negative, but I think more commonly a positive feedback loop that we think we might think we're doing a great job because this person says, I'm great. This person says, I'm great.

These people are thanking me constantly. How could you possibly be disappointed in my performance? Right. And, and sometimes we're just perceived differently. The way we engage with different parts of the organization, our employee, if you're a [00:42:00] manager, your employees might see you different than your peers in other departments, uh, might see you different than your direct, uh, uh, supervisor might see you differently than other senior leadership.

Everyone's going to have a different vantage point and, and you can't grow unless you really, you really see all that. So

Mary: Agreed.

Mike: anything else on 360 reviews?

Mary: I mean, I think they're fabulous. You know, obviously being an HR nerd, I think they're really powerful. Um, so I, I think I'd recommend that if you haven't used them to go ahead and, and, and try them and see, you know, see if it helps.

Mike: I will say, I think some of my Biggest growth as, as a, as a manager, as a leader in my entire career has come out of 360s and it's been when the feedback really stung. Um, and it's really stung from people that I really liked and respected. [00:43:00] And it wasn't even, uh, it wasn't even, Hey, you suck at this thing.

It's Hey, when you, when I see this behavior, this is what it looks like it means to me. And I'm like, Oh my gosh.

Mary: I didn't mean that.

Mike: That's not at all how I meant that. Right. But that's how, but that's what I'm putting out in the universe. 'cause this person said it, this person said it, and this person said, it's like, that is not my intent.

Oh. Like, yeah, there's only one common denominator in this problem. It's me. Right. So, yeah. I, I think they're, I think they're hugely impactful. I, I'm, I'm a fan.

Last one. Do you, so I think everyone, we've had a focus on high performance so far. Um, this one goes the other way. Do you have document, do you document performance improvement plans for underperforming employees?

Um, only a 13 percent spread for larger firms. This seems to be an area that As companies get bigger, okay, this is a standard [00:44:00] practice, right? So 63 percent said yes versus 76%. Yes, it's a 13 percent spread. It's meaningful. Fast growth firms do it more often across, but if I look at the smaller firms under 25 employees, uh, again.

We know that the smaller firms, they're more strapped with time and resources, resources meaning money and just skills and all kinds of things make up resources, right? But it's 49 percent of zero growth firms said yes, so call it half. 80 percent of fast growth firms said yes, so it's a 31 percentage point spread, a correlation to revenue growth, whether they do or don't have, uh, document performance improvement plans for underperforming employees.

Mary: yeah.

Mike: What, what What's so magical about the document, Mary?

Mary: Well, like I said before, if it's not written down, it's, it's not real. Um, and you know, you want to make sure that the employee, you know, if they have it in writing, they [00:45:00] can review it at another time. When you're giving, you know, negative feedback, sometimes they don't hear everything that you said, um, because they're upset, right?

They might Get defensive and not even, you know, talk over you, et cetera. So this way it's, it's in writing. Now, obviously the compliance side of me wants it in writing so that if we do go to termination, we have a defense in court that we did give them, you know, the fair warning, but if we all and the other pieces, of course, consistency, if we're always writing people up. But, um, warning notice, you know, is for those, you know, uh, probably more of your non exempt employees. The performance improvement plan then would be for an executive level individual that's not meeting standards, and that is going to be a longer document, and I'm going to use the job description to drive that.

[00:46:00] Um, performance improvement plan, and because it's a longer document, it needs to be a document, right? If I tell somebody, you know, an attorney, uh, at one of the law firms, we support, you're not doing a great job. You need to do better. Here's your warning sign it. Doesn't really mean much because it's a complex job.

So what area needs improvement? How do I improve? Are we meeting on it and talking about it? So again, having it in writing, I think is important on the compliance side, but it's also in fairness to the employee who's getting the warning or a performance improvement plan. They have something to go back. to, to look at, to read, so that they can understand it, they can ask questions about it.

Um, so, you know, for, for those reasons, it, it needs to be in writing.

Mike: Yeah, I, again, I feel I have moments of guilt pop up in these conversations. Cause you know, I talk a lot about HR [00:47:00] best practices and I know, I know I'm here, but do I live them out here and then my day to day, uh, and not as much as I want, and I just, I'm reminded of scenarios where I really thought this employee. Knew that they were underperforming in these areas and they were missing expectations until it came time to put them on a documented plan and they were shocked. And I'm like, Oh my God, I mean, clearly it's my miss, not theirs.

Mary: yeah.

Mike: I shouldn't say clearly. I think there's, there's, there's some sometimes. The reason they're underperforming is because they don't pick up on social cues from anybody, but maybe that's not always you, but, but clearly I missed the boat, didn't, right?

Mary: yeah.

Mike: I feel like, I feel like having a documented performance process. That might include, certainly it includes, uh, uh, uh, setting expectations. So we talked about the other questions, communicating expectations, having a [00:48:00] performance review process that includes performance improvement plans, a PIP, if you will, that following those processes.

Forces you as a manager to have better conversations further upstream. Cause I, if I'm a manager and I know gosh, darn well, that my boss is not going to let me terminate this person who's clearly underperforming. It has been for a long time, but I'm not going to be allowed to do it unless I have a performance plan in place.

I'm going to be, I'm going to be having the right kinds of conversations further upstream so that that isn't a shock. So I almost think it's not the document itself. It's what it does, the, the bar you're setting as a company and the expectation you're, you're setting on your managers and your leaders for how they set expectations with employees further upstream, because that then just becomes a natural, natural consequence of the process.

Mary: I agree. And, you know, we, we talked about, you know, [00:49:00] really good performers don't want to work with mediocre performers. Most employees know the level of productivity of their co workers and I don't care if that's manufacturing where you can really see how many widgets they made or whether it's, you know, the law firm that I talked about and they see, you know, how many cases they're trying or, whatever it is, right?

They know, right? They know who comes in early, who works late, et cetera. Right? So. When you don't, hold everybody to the same standard and, you know, you don't publicize that you put somebody on a warning notice, but somehow it gets out there, right, Mike, we all know this, that it, it is better for everybody's performance because there is nothing more frustrating to a good high performer when they go, I come in, I'm going to I work really hard, I am very [00:50:00] successful, and Mike doesn't, and they do nothing about it, right?

When they see Mike going into the manager's office, they might not know it's a warning, but they know Mike is being Guide it, right? Um, and it, it, it, I'm telling you, it does, it does a lot for morale where you would think it was the opposite. It is not. Um, everybody wants to know that they're all held to the same standard.

Um, and, and look, I think we have to get away from the idea that when somebody is on a warning notice or a PIP. They're going to be terminated. Like it's a foregone conclusion. It is not. I've been doing this a really long time. That's not the attitude that we should have. We should be setting those strong expectations with a warning notice or a PIP to rehabilitate, guide, coach, counsel that individual so that they meet or exceed the [00:51:00] standards of the job.

Mike: couldn't possibly

agree more. I couldn't possibly agree more. I, I certainly I won't dox the person, but a long, long time ago, I, I took over a new job and I had a, I had a young VP reporting to me that I thought was super high potential, really loved this person, uh, did a lot of really great things, but it was missing the mark pretty bad in just a couple of very specific areas and first 30, 60 years in the job, I put them on a performance plan.

They were shocked. They'd never, never, never imagined. Um, They crushed it. That person is an SVP at a big, big company today because they're awesome. They, they were awesome then, and they shored up a couple of things that were shortcomings. And they're awesome now, and they've had a fantastic career. So this is not a.

If you're seeing this as this is the step before firing someone so I don't get sued, then shame on you. I mean, maybe there's a little bit of a [00:52:00] truth around some liability and some protection because you can prove that you set expectations, but that probably falls in the, uh, risk mitigation category. We didn't put that in the survey, risk mitigation.

We put performance. And so if you're going to raise performance, That's how you got to use the tool.

Mary: Agreed.

Mike: All right, Mary, that's all the questions. Maybe I'll give it to you to close, put a bow on this, and I'd maybe encourage you to go back to where we were at the top here. The number one of the eight categories, the one that had the highest correlation to revenue growth with a spread between zero growth firms and fast growth firms of 32 percent was retention.

The next is development, 30 percent spread, and now, uh, performance with a 22 percent spread. Why is performance so important and how does it correlate to the other two?

Mary: Yeah. And, and, um, [00:53:00] I think I'll repeat what I started with is, honestly, this is how we drive the success of the organization, right? It's not enough to, uh, just hire our employees. We have to make sure that the, um. That the performance is driving to the goals, that the expectations are set, that they understand the skills that they need.

And we're doing this all the time, right? And a lot of this comes from the managers. So I would just remind everybody that management training is paramount. Every year, multiple times a year, to Just remind them. You could have stellar managers. You and I have managed people for many, many, many years. I still, you know, do a management training class and read a management book and I know you do on a consistent basis.

We all need reminders. We all need help to manage performance [00:54:00] to drive the ROI.

Mike: Yeah, yeah, and, and I'll kind of recap my, my big takeaway from this session is performance correlates to growth for very obvious reasons. Um, you hold a high standard of expectation, uh, for your best and your lowest performers. Um, and the entire organization naturally will perform higher when you do that.

Um, but talent wins, you know, if I'm, if I'm the, if in my, in my sports analogy, I may be the greatest basketball coach of all time. Um, but if all my players are five foot two. Uh, I'm not going to beat, uh, a team with a bunch of six, six, seven footers who are, who are better than me. I'm just not, no matter how good of a coach I am.

And so performance really matters.

Mary: Agreed.

Mike: But what is, whose performance are you managing? Are you managing mediocre players or are you [00:55:00] managing really talented players? And how you get really talented players starts at the top from recruiting. You got to have great benefits to recruit the right kind of people.

Uh, you got to onboard them properly, development. You got to, uh, uh, stay compliant, of course, through all this. And then what are you doing to retain that talent? That's like, that all precedes, it's all further upstream from managing, managing the talent through performance. Oh yeah. All right. Mayor, love our conversations as always.

Thanks for joining me today

Mary: It was great. Thank you.

Mike: and thanks to everybody else. And thank you for letting us be part of your mission to grow.

Outro: That's it for this episode of Mission to Grow. Thanks for joining us today. For show notes and more episodes, visit us at missiontogrow. com. If you found this content valuable, I invite you to share it with a friend and subscribe to the show. If you really want to help, I'd love it if you left a five star review on Apple Podcasts, YouTube, or wherever you listen.

Mission to Grow is sponsored by Asure. Asure helps more than 100, 000 businesses get access to [00:56:00] capital, stay compliant, and develop the talent they need to grow. To learn more about how Asure can help your business grow, visit AsureSoftware. com. Until next time.