Don’t just tick the boxes

Posted on 4 Jun 2009 by The Manufacturer

Manufacturers take employee satisfaction and performance appraisals seriously. But a recent survey of appraisals shows that manufacturing consistently scores the lowest in a range of industries. Why? Sarah Coles investigates.

In an ideal world, a performance appraisal is central to effective people management. It is a chance for managers to talk to employees about their strengths, weaknesses, aims and objectives for the coming year. The employee walks out of the meeting with an understanding of where the organisation is going, and how they fit into the big picture, engaged and enthused. But we live in a far from ideal world. In reality things are very different. As Dawn Etherson, human resources manager for Aggreko Manufacturing says: “The feedback I got when I joined the company was that it was a tick-box exercise. A lot of the time the manager would just complete it themselves it and hand it to the individual.”

This experience is far from unusual. A recent survey by talent management consultancy ETS interviewed 175,000 employees across a range of industries. It found overall a very high level of dissatisfaction with company appraisals, at 38%. However, the figures among manufacturers were the worst for all the industry sectors, at 53%. Betsy Travis, a chartered occupational psychologist, senior consultant at ETS, and author of the report says: “In traditional manufacturers, the majority of people are on the factory floor and not in the most inspiring atmosphere. The focus is more on outputs than on the people, from a business perspective.”

This is overlooking, however, the fact that people are part of the manufacturing process, and like any other part, you need them working efficiently. Without performance management, there is no reason for anyone to perform. Simon Jones, chief executive of Investors in People, says: “Organisations pay lip service to the process without thinking what it’s there for, to review progress over the year, examine where things have gone well, where things could go better, and where individuals need to focus their development.” Without it you have a workforce where the poor performers are allowed to continue turning in substandard work, while the very best employees go unrecognised and unrewarded.

The case for total staff engagement
Failing to acknowledge the strongest staff members will mean they quickly become disengaged. While some may argue that you’re never going to get the entire workforce passionate about what are often fairly transactional jobs, Travis insists that wholesale disengagement is highly wasteful. She explains: “There is definitely an argument that the workforce needs to be engaged. It may be a functional role, but there are still productivity gains to be made if people are focused on the wider impact of their role. There are also issues such as attendance which will be better when an employee is actively engaged.”

Even if employees still put in the effort, without performance management they will have no direction, because their personal objectives aren’t clear. The ETS survey asked whether employees understood what the company wanted to achieve over the coming year. Overall 74% of all employees did, but that figure was just 60% in manufacturing firms. Likewise they were asked whether they knew the department’s targets for the next year. Overall 78% did, while only 72% did in manufacturing companies. Given the vital importance of hitting targets for the profitability of the business, this is clearly a serious shortcoming.

Because so many employees don’t feel any personal interest in hitting business targets, managers are forced to drive efficiency themselves. This is one reason why relations between employees and managers are deteriorating. The ETS survey asked employees whether they felt they were well managed. Overall, 81% of all employees think they are, whereas only 69% of manufacturing staff do. Similarly, when asked if their immediate manager shows appreciation for what they do, overall 85% of employees said yes, whereas just 73% of manufacturing employees agreed. This level of disenchantment is particularly worrying in tougher times when employees may be asked to go the extra mile for the business — accepting longer hours that reduce overtime payments or taking a cut in pay. A disengaged, directionless, unhappy workforce is unlikely to get on board with these kinds of proposals.

You are the weakest link – join us
So how can employers reverse these trends? The first is to get managers behind the appraisals and performance management process. Currently they are the weakest link in the chain. David Bellis, human resources director for chemicals firm Johnson Matthey points out that appraisal isn’t part of the daily process of managing a manufacturing business, so it is seen as extra work that doesn’t always lead to direct outcomes. A survey by YouGov for Investors in People highlights that this attitude renders appraisals pointless. It found 23% of those who get appraisals think their manager looks at it as a tick-box exercise, and 19% say their manager doesn’t even think about it until they are in the room.

In order to get buy-in, the process has to be matched to the culture. In the vast majority of manufacturing companies this means establishing two forms of performance management, one for the shop floor, and one for professional roles.

On the shop floor the process itself needs to fit into the working culture. Travis says: “The physical work environment makes it difficult for managers to have a one-to-one relationship with employees. They may not have the space and privacy to have the conversations. It means traditional individual appraisals may not be so suitable.”

At Aggreko, performance management is tailored by adopting different approaches for office and professional staff — who receive a formal appraisal — and shop floor staff who are assessed against a skills matrix.

The matrix enables an employer to build a structure listing the skills that an individual should have achieved at each stage of seniority. Staff can then be rated against the matrix. Employees who score poorly can be assessed for performance management, while those who do well may be considered for recognition and reward.

Justin Grice, a senior consultant in the human capital group at Watson Wyatt says this can be an effective approach. Elsewhere, he says: “For lower level employees you can look at performance on a team basis. You don’t need to sit and talk to every member of the team. You have the metrics on performance in terms of productivity and quality levels. Then the team leader or the supervisor can measure individuals according to a set of behaviours that have been deemed important to the business, such as adaptability and attitude. You can use this information to identify the weaker members of the team and the stronger ones. Then you can deal with them differently when it comes to managing their performance.”

Demonstrate the worth
At a more senior level, developing effective appraisals is about demonstrating to both managers and employees why it is important. Grice says buy-in starts at the top: “If you don’t manage performance then you’ll never get the best out of your capability, and therefore you’ll never outperform your competitors. Once the senior management think like that, performance management will happen.”

Simon Macpherson, senior director of business development and operations for Kronos Systems agrees: “Most manufacturers work to get the most out of machines, and have got their supply chain to a fine art. It’s about explaining that they need to look at the human aspect too. If they are going to remain competitive in a high wage economy like the UK, they need to get the workforce working as productively as possible.”

This commitment needs to be cascaded down to managers. Etherson has been doing this over the last year. She says: “I have been training managers and raising the profile of the appraisal process — and it is gaining credibility. The feedback I get is that it’s now seen as a tool rather than a process they have to do.” Grice agrees: “If it’s going to move beyond a tick-box mentality, the line manager needs to be trained. You need to give them the skills they need to do the job. They need to know how to have a conversation about performance, how to deal with poor performers and so on.”

They also need the right information. Macpherson says: “You need to provide the line managers with the tools they need to do a good job. They need to have the systems in place so they can see things like patterns of absence or performance against labour standards of quality, or the time spent adding value.”

Meanwhile, employees need to appreciate the significance of appraisals too. Grice says: “You need to explain to them how it helps them, how it affects reward and promotion, and how it can help in their career.”

Once individuals across the organisation have bought into performance management, it’s about making the process effective. For those involved in more traditional appraisals, this means setting objectives and scoring individuals against the behaviours and skills that reflect the needs of the broader organisation.

To be effective on both a shop floor and a professional level, performance management also has to be meaningful, which means appraisals must feed into recognition and reward. At the moment they clearly don’t. In the ETS survey, when asked whether the promotion and development system is fair, overall 59% of employees said yes, whereas a meagre 44% of manufacturing staff agreed. Similarly, when asked whether they were happy with their opportunities for career development, 67% of employees agreed overall, compared to just 55% in manufacturing companies.

Marjorie Toucas, senior director, EMEA of SuccessFactors says: “Seventy one per cent of people believe whatever they do it’s not going to be rewarded with pay and promotion, so you need to be clear about how it is integrated, how meeting their goals or skills targets will feed into pay for performance or promotion.”

She adds: “Everything can be integrated, so when you do the performance review you have goals, and understand how you are performing towards competencies. So when the employee and managers conduct the review, the employee knows from a performance standpoint what they need to do in order to get a promotion or a pay rise.”

Repairing a broken performance management system isn’t a simple or quick thing to do. For many manufacturers at the moment, it may initially seem hard to justify focus on this area, when there are more pressing concerns of profitability. However, using resources to ensure employees are engaged is never a waste. These are the individuals who will see the organisation through the tough times. Ensuring they are productive, engaged and focused should be at the top of every employer’s to-do list.