Destination: Improved Performance and Higher Profits
Business Journal

Destination: Improved Performance and Higher Profits

Executives can't lead teams toward those goals if they don't know how to get there

It's great when smart, ambitious executives want to take their companies to higher levels of performance and profitability. But it's impossible to lead teams toward that destination if you don't know where you want to go or how to get there. In the first article in this two-part series, I discussed the first two steps to fixing this problem: First, figure out where you're going. Second, measure progress toward the destination.

You can lose sight of the destination if you're distracted by too many metrics.

Those steps are a good start, but they're only a start. Step three gets your company in sight of its performance destination. Every team needs to know which metrics to focus on, which to examine as needed, and how to determine the difference. And step four will help your teams keep their eyes and minds open to make the final push to their destination.

Step three: Drive for results

In part one, I looked at a common problem: Executives who try to decide what performance improvement they want to achieve and how they want achieve it at the same time. Those are two separate tasks, and executives should handle them sequentially. Even if those tasks are done well, companies can still get off track if they pore over every metric, getting lost in a forest of numbers.

Some numbers are vital, and some are vital only in certain circumstances. You can lose sight of the destination if you're distracted by too many metrics. The basic rule is that metrics for a workgroup must relate to that workgroup's performance or behavior -- and to the company's overall vision and strategy -- directly and logically.

Take the example of a fine-dining establishment. It would make no sense to reward the wait staff for the culinary achievements of the head chef, just as it wouldn't make sense to blame the chef for the hostess' surly behavior. What would make sense is to inspire the entire restaurant staff with a vision of what a superior dining experience looks like. Then show them how each person contributes to that outcome:

  • For the hostess, it might be a warm greeting when patrons enter the establishment, followed by promptly seating the patrons.
  • For the waiter, it might be courteous but not overly solicitous service, remembering return clients and their preferences, and promptly delivering the food when it is ready.
  • For the chef, it might be unique and savory culinary inventions that differentiate this restaurant from its competition.

But how do you measure that? What metrics apply to "savory inventions" or "not overly solicitous service"? To find the right metrics, don't look at everything an employee does; look at the things an employee does that have a tangible impact on customer engagement.

The right skills and actions lead to results. Let's imagine that our restaurant has hired a new hostess. She knows that her job is to greet patrons and seat them, but she may not know what specific activities determine the highest level of customer engagement. If she was simply told to "make sure patrons are happy," she would be left to guess what is important.

Instead, her well-managed restaurant has analyzed the right metrics for a successful greeting experience:

  1. Patrons want a prompt and warm greeting. They define prompt as in the first 10 seconds of entering the restaurant. They define warm as including eye contact, a smile, words of greeting, and use of their name when known.
  2. Patrons want to be shown to their seat within two minutes of arrival.
  3. When seating is delayed, patrons want an accurate estimate of when they will be seated. And when possible, they like being offered options such as waiting in the bar.
  4. Patrons consider a wait of more than 45 minutes unacceptable under any circumstances.

By sharing these insights with our new hostess, she gets a clear image of what the perfect greeting might look like. This image also makes it much easier to coach behavior to the desired outcome and to measure results.

Look beyond the averages. I live in a beautiful part of northern California between the Bay Area and Lake Tahoe. If I invited you to visit during the summer, you might consult a guidebook and learn that the average temperature in the summer is in the mid-80s. If you dug no deeper, you might be surprised to find that the Delta Breeze consistently brings the temperatures down to the high 50s at night while the midday sun often pushes the highs above 100. It takes both the average and the range to give you the full picture.

Whatever approach the team takes, it must remain objective and open-minded about the factors that surface.

The same is true in performance management, as our restaurant example shows. Our restaurant routinely surveys its patrons on their dining experience. Let's say that our new hostess has been on the job for 60 days. During this 60-day period, our hostess achieved an overall satisfaction rating of 3.4 on a scale of 1 to 5, with 5 as the highest rating.

Her manager might look at this average and conclude that she only needs to show modest performance improvement across all greeting interactions to take her to the next level. If he looked beyond the average at the distribution of her actual survey scores, he would see a different picture. Here are the survey results for 35 patrons polled during the 60-day period:

patrons and average score.gif

This distribution shows that the greeting was perfect for many patrons (11 out of 35), which indicates that our new hostess is achieving a strong outcome much of the time. The alarming statistic is that 11 patrons considered the greeting experience to be a complete or near failure. Looking at the average alone would not give us this insight.

Treat the cause, not the symptoms. No matter what the performance distribution looks like, leaders should ask, "What makes it so?" Why is it possible for a person or group to perform at excellence in one instance, while others in similar or identical circumstances find themselves defining low performance?

A manager I once worked for was becoming frustrated with the results of an operating review. The numbers seemed to suggest bad news, and her team was reluctant to discuss them openly. In an effort to change the group's mindset, she said, "Look, numbers are our friends. They inform us, and they tell us the facts." This was a call for objective and open curiosity about what the numbers had to say.

Numbers become our friend when we get curious about the relationships between performance differences and their underlying factors. Look at the numbers; then form theories about what might be causing the differences. Is it geography? Staffing? Customer mix? Once your team has developed a thorough list of possible causes, you can examine the connections between various factors and the resulting high or low performance outcomes.

Some theories will prove to be wrong. But some may be right, and this can inform your improvement strategy. Note that you often must ask why several times to arrive at the root cause and gain truly actionable insights. Our restaurant's distribution of performance on greeting presents an excellent case in point:

  • Question 1: Why do 11 out of 35 patrons score the greeting experience at 1 or 2 out of 5? Answer: They experienced an excessive wait to get seated.
  • Question 2: Why did patrons experience an excessive wait? Answer: Seating demand exceeded available service capacity.
  • Question 3: Why was there a constraint on service capacity? Answer: Though tables were available, wait staff was insufficient to provide service to all patrons.
  • Question 4: Why was there insufficient wait staff? Answer: Though the staffing model accurately predicted that more staff was needed, a larger-than-expected number of wait staff failed to show up for work.
  • Question 5: Why did a large number of the wait staff fail to show up? Answer: The restaurant hires many college students, and this was the week of final exams.

Companies that don't ask why often find themselves attacking symptoms rather than the cause. In our restaurant example, recruiting a smaller number of college students or adjusting staffing around key academic events would address the real issue.

Conduct a formal study. Another approach is to skip informal theorizing and let an in-house or consultant analytics group take a fresh look. By identifying and correlating the relationships among all the possible factors that influence performance, the analytics team can determine which factors are linked and which are not.

Figure out where you're going. Measure progress toward the destination. Drive for results.

Whatever approach the team takes, it must remain objective and open-minded about the factors that surface. As Mark Twain said, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." It was true in Mark Twain's time, and it is true today: Human nature often leads us to believe plausible explanations that we have never tested empirically. And in many cases, those explanations just aren't true.

I remember talking to a retailer who operated out of a storefront in a small city in south Texas. He was very concerned about acquiring new customers. I asked if he had considered drawing customers from a nearby larger town. He quickly shook his head and said confidently, "Why, that town is the county seat for the next county over. There's no way anyone who lives there is going to come over here to do business."

You might guess what happened next. We checked a geographic distribution of his customers and discovered that almost half of them resided in the next county. What he perceived as an insurmountable obstacle to tapping into a new customer base turned out to be no obstacle at all.

Jumping to easy but mistaken conclusions is a basic human tendency that managers must understand and avoid. Systematically isolating and debunking myths that misdirect effort and energy is one of the most important efforts a leader must champion.

Step four: Take action -- or make adjustments

Once we understand the underlying drivers of performance, we will see that managing performance improvement requires many concurrent strategies. What our lowest performers need to improve is a far more prescriptive and remedial program than what higher performers need. Many organizations use a formal program to intervene with low performers. First, make sure they have the right training and the necessary skills. Next, establish clear expectations and consequences. The process should also address talent fit: Does each person have the right talent and skills to be successful? Or would a reassignment better serve the person and the organization?

Below-average performers may need more fine-tuning, recognition, and encouragement. This is the sweet spot for organizational incentive and recognition plans. These strategies can provide broad-based, systemic encouragement. When properly configured and managed, these programs become powerful levers to improve sub-par performance.

Top performers, however, may need us to step back and cheer them on. They also may hold the key to even better organizational performance in the future. In this case, you want to engage in test-and-learn activities with some or all of the top performers to see how your best performers can become even more effective.

The inchworm. When you visualize your performance improving over time, the outcome will be the result of multiple strategies operating in sync. The performance trend shows steady progress toward the performance destination. But don't expect a straight, smooth line.

Consider the inchworm. He moves along in his chosen direction by first pushing out with his head and them bringing up the rest of his body from the tail. More than likely, your performance distribution will also move like this. Your top performers will find new and better ways to push productivity and define what the best can do. Your interventions will bring up the low-end performers and systematically address performance gaps. All the while, average performers will learn from the best and become incrementally better.

The result is that your company, like the inchworm, will make consistent progress. And when you arrive at your destination -- genuine sustainable high performance -- you will feel like success was inevitable. It wasn't.

Making success a decision

Figure out where you're going. Measure progress toward the destination. Drive for results. Take action or make adjustments. These four steps guide teams, keep them moving forward, and prevent them from falling off the path. The result is higher performance. But taking these steps isn't mandatory. Some companies will take them, and some won't. And that's why success isn't inevitable -- it's a decision. And the decision starts at the very first step.


Jay Freeman is a Senior Advisor at Gallup.
Gallup http://www.gallup.com/businessjournal/158054/destination-improved-performance-higher-profits.aspx Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A +1 202.715.3030