Skip to content

Posts tagged ‘Performance’

Transforming employees into shareholders may not be a good idea

image by risayv

Logic would tell us that offering shares of your company to your employees (assuming they are offered at a good price) should clearly boost performance and allow the organization to achieve exceptional results. After all, wouldn’t most people work harder, reduce inefficiencies, increase their performance and chase sale leads once they become shareholders?

Turns out logic does not necessarily prevail in this situation and results may not be extra-ordinary.

Let me share with you our not-so-successful experience.

Our experience

I’ve already stated that Pyxis is an experimental laboratory and like many people, we understand that money by itself is not a good motivator. We also believe that sharing the wealth with the people who contribute toward achieving the business results is not only a good idea, but it is for us a morale obligation.

So at the end of 2007, the founder and then CEO agreed to sell 25% of his shares to the employees with the intend to increase performance and share the resulting wealth – in addition to using it as an employee retention strategy. At the time, almost 100% of the employees created a cooperative to own shares of their company. It is important to specify that our province offers important tax credits to employee-owned cooperative – which was an important driver in creating a cooperative.

The conclusion after more than 3 years of having employee-shareholders is that the intend and the objectives were right but the way to achieve them weren’t done right. Why is that? I asked myself.

Below are my conclusions but before we get into those, I believe it is important to understand the distinction between being an employee and being a shareholder.

What is an Employee?

An employee contributes labor and expertise to an endeavour. Employees perform the discrete activity of economic production. Of the three factors of production, employees usually provide the labor.

Specifically, an employee is any person hired by an employer to do a specific “job”. In most modern economies, the term employee refers to a specific defined relationship between an individual and a corporation, which differs from those of customer, or client. Wikipedia

What is a Shareholder?

A shareholder or stockholder is an individual or institution (including a corporation) that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself. Wikipedia

Clearly, there is a distinction between the role and contribution of an employee versus that of a shareholder. For one thing, transforming employees (with their behaviors and attitudes) into full-fledged active shareholders doesn’t happen over-night. To be honest, it still didn’t happen after over 3 years for almost 1/3 of the employees. Did we hire people who were not driven by results? Well, maybe for a couple of people but certainly not over 30% of the people. So why is it that results didn’t go through the roof?

After much analysis of the situation and heated debates, I believe there are a few reasons why transforming employees into shareholders didn’t give outstanding results:

  • Creating a cooperative has a non-capitalistic connotation: People who initiated the process of selling shares to the employees also wanted to implement a coop as a way to distribute wealth. Unless our implementation of a coop is very different than elsewhere in the world, many people understood a coop to be a non-profit driven initiative and as such, acted accordingly. Having a coop own 25% of the shares led to non-capitalistic behaviors and consequently slowed down growth and profitability.
  • Becoming an active shareholder isn’t the norm: Unless you have owned and operated a business in the past, the notion of becoming an active shareholder isn’t easily understood by most people. Many people – still to this day – ask themselves what it means to be a shareholder and how they should act differently. Transforming employees into shareholders is an educational process and unless you invest in training people what it means, the transformation will not give great results.
  • Lacking entry criteria brings performance downwards: Since everyone got access to shares without exception, there was no motivation to increase performance – why work harder than the next guy when the results are shared equally. On the other hand, when past performance is used to determine who gets the privilege to own shares, individual and collective performance is increased and as a consequence, the overall performance of the organization goes North.

Consequently, attempting to transform employees into shareholders overnight was a mistake in our case. If we had to do it again, I would still give employees the opportunity to own shares but it would be done according a different approach:

  • Owning shares is a privilege and would be based on past performance;
  • Allowing employees to own shares would be done in small increments, and annually (let’s say x% per year);
  • Potential shareholders would need to demonstrate their understanding of what it means to be an active shareholder and would need to agree to certain protocols;
  • The percentage of available shares would be results-based – the better the organizational results, the more shares would become available.

Based on this experience, I would gladly grant shares to employees who clearly understood the meaning and responsibilities of being an active shareholder and who have demonstrated (and are still demonstrating) outstanding performance. Otherwise, there is no wealth to share…

The strength of a real team is under-estimated

Image by Dawn (Willis) ManserProject kick-offs have been used for years as a way to launch a new project. It is assumed that bringing people together in a room where the project sponsor presents the project’s objectives and time-lines is a good way to get things going. To be sure that the newly formed team will perform well, some organizations even order sandwiches or sushi and add diet software drinks or beer, and so the project begins.

I really don’t have a strong opinion about project kick-offs but I do see a great opportunity to start building a real-high-performing-team from day one is often missed.

Having been part of great (and not so great) teams over the years, I’m obsessed about creating real teams – the ones we remember forever because we delivered outstanding results while being highly energized, and had a great time doing it. It is similar to the concept of Flow proposed by Mihály Csíkszentmihályi.

Flow is the mental state of operation in which a person in an activity is fully immersed in a feeling of energized focus, full involvement, and success in the process of the activity. […]

According to Csíkszentmihályi, flow is completely focused motivation. It is a single-minded immersion and represents perhaps the ultimate in harnessing the emotions in the service of performing and learning. In flow, the emotions are not just contained and channeled, but positive, energized, and aligned with the task at hand. To be caught in the ennui of depression or the agitation of anxiety is to be barred from flow. The hallmark of flow is a feeling of spontaneous joy, even rapture, while performing a task[2] although flow is also described (below) as a deep focus on nothing but the activity – not even oneself or one’s emotions.

Colloquial terms for this or similar mental states include: to be on the ball, in the moment, present, in the zone, wired in, in the groove, or keeping your head in the game. Wikipedia.

So back to creating a real strong project team (The Wisdom of Teams: Creating the High-Performance Organization). Why not start with something simple, real simple? Establishing rules and protocols of operation for the team.

As a first step in launching a new team, I usually start with an initial meeting (the duration varies based on the size of the team and the project being undertaken) during which I ask the team members to establish their working protocol – how they wish to work together.

Here are some of the questions the team members need to answer prior to doing anything else – including actually starting the project:

  • What do we wish to accomplish together?
  • What ground rules will we play by?
  • How do we make decisions?
  • How long can discussions and debates go on for? Do we use time-boxes in meetings? For decision making?
  • How do we resolve disagreements?
  • How often do we need to meet? For how long?
  • How will we communicate with each other?
  • How do we keep track of our action items?
  • How do we deal with team members who do not live up to the team’s expectations?
  • What rules do we have to include new team members? To expel existing team members?
  • How will we know if we are successful as a team?

Some of these questions may appear to be trivial. While establishing a team protocol doesn’t need to take a lot of time (and can easily be combined with a team building activity), not establishing such a protocol will quickly lead to inefficiencies, waste of time, and increased frustration for the team members. Want a few examples?

  • Did you ever find out that some project team members’ personal objectives had nothing to do with the project? Trying to motivate those people will drain your energy and your focus.
  • Has a detailed technical decision ever been taken by a senior manager with weird consequences? Guidelines may have prevented the decision from being escalated in the first place.
  • Have you participated in meetings where key people didn’t show up or showed up late with the consequence of having some decisions over-ruled? Determining up front the rules around meeting attendance and decision making will greatly alleviate such frustrations.

These are only a handful of examples but time and again, I have had the privilege to launch teams on the right foot. The consequences are positive and the cost is minimal. It may not be as cheap as buying sandwiches for the team during the project kick-off but the investment will last much longer.

People managers may be the biggest impediment for increased performance

Image by tibchris

Since the introduction of the PC in the workplace, dramatic performance improvements have been few and far between. In an age where there are more jobs in services than in manufacturing in Canada and where the employees are highly educated, we can wonder why there isn’t any dramatic performance improvements. There certainly isn’t a lack of innovation in organizations, so could it be that something else needs to change?

It is true that the people entering the workforce refuse to be managed like their parents were. They expect to be treated fairly, be given a challenging position where they can learn and apply their skills, and manage their schedule. In this context, standardized work practices and traditional management styles no longer help increase employee performance, it can actually reduce the teams’ performance. Traditional work methods also have the negative impact of driving people away or making it difficult to attract new talent.

Very few people would debate that it takes time to develop highly performing teams and once you have the team on the road to success, you wish to retain your employees. It is these high performing teams that are often the source of innovation within an organization. As long as the organization creates the right environment for people to generate new ideas.

Ever since the 1900’s with Fayol‘s – Plan, Organize, Direct, and Control – managers have been following a traditional approach to people management and we believe that changing the leadership style – to become Agile leaders – is likely to deliver better results and performance.

Why Scrum increases team performance?

As I recently mentioned, traditional managers are used to

  • Assigning work to team members
  • Determining priorities of the tasks
  • Monitoring progress of the activities
  • Making decisions for the team

Whereas Scrum transfers the authority to the self-0rganized team. The underlying concept being that the best solutions will emerge from the team itself.

  • While the manager determines the objective to be reached (the WHAT?), the team determines the means to achieve it (the HOW?)
  • Once the goals is established, management (aka The Product Owner) determines a budget and time lines under which the team will operate
  • Management maintains responsibility to prioritize the activities but without assigning the work
  • Commitments are negotiated between the manager and the team, as opposed to being imposed by the manager – negotiated agreement greatly increases commitment
  • The team is responsible to deliver on its commitment and the Scrum Master is there to support the team in doing so
  • Peer pressure is more effective than authority at getting people to work collaboratively
  • The people closest to the work are in a better position to determine the best way to accomplish their tasks and to potentially introduce innovation in their work methods
  • Frequent inspection and retrospection of the work accomplished creates visibility on the deliverable and prevents faulty results from being delivered
  • The iterative process allows the team to learn from their experience and improve the process
  • People are more motivated when they manage their own work
  • People are more committed when they make their own commitments
  • Teams and individuals are more productive when they are not interrupted
  • Teams are improving when they solve their problems by themselves
  • Productivity is compromised when changes are made to the team composition
  • Face-to-face communication is the most productive way for a team to work and exchange

Seeing how Scrum positively impact productivity and team performance, it becomes critical to determine how the managers must behave to support such progress. As such, managers must:

  • Transfer authority and responsibility to the team so it can do its work adequately
  • Avoid interference and micromanagement
  • Promote collaboration and teamwork
  • Support learning and not systematically penalize failures
  • Review best practices in order to adapt them to changing realities
  • Make adjustments to the facilities so the environment facilitates the execution of Agile projects
  • Adapt the management style to the context of the team

Instead of consequence delivery, managers should focus on making sure the team has learned from their mistakes and have taken appropriate means to fix the issues in the future. In addition, peer pressure is a much stronger motivator and intrinsic motivations are stronger than external motivators.

I believe there is still a lot of value with having managers as long as the new Agile Managers adapt their leadership style and activities to their team. What do you think?

Congratulations, you have the best player. Does this mean you will win the cup?

Image by wstera2With the hockey season well on its way and the Canadiens doing well so far, an interesting question popped in my head – is the winning team, the one with the best players? You can guess I am less interested in hockey than I am with business teams when that question appeared.

As a manager or a leader, isn’t our job to find the best players for our project or our organization? If we don’t have the best players, aren’t we doomed to fail?

With that question in mind, I did a not-so-scientific exercice. I looked at the winning teams in the last 5 years and determined if there was a correlation between the best player (in this case, the best offensive player) and the winning team. Much to my surprise, in the last five years, only in 2008-2009 did the best offensive player(s) win the much coveted Stanley Cup when Evgeni Malkin and Sidney Crosby played with the winning team (Pittsburgh Penguins).

Much in line with a post I wrote last year, it makes more sense to focus on creating a highly performant team than to hire on “the best” individual contributors. The same seems to be true in hockey as it is in a business setting. Wouldn’t you agre?

2009-2010 Stanley Cup Winner Chicago Black Hawks
Player Team Pos GP G A P
1 Henrik Sedin VAN C 82 29 83
2 Sidney Crosby PIT C 81 51 58
3 Alex Ovechkin WSH L 72 50 59
4 Nicklas Backstrom WSH C 82 33 68
5 Steven Stamkos TBL C 82 51 44
6 Martin St Louis TBL R 82 29 65
7 Brad Richards DAL C 80 24 67
8 Joe Thornton SJS C 79 20 69
9 Patrick Kane CHI R 82 30 58
2008-2009 Stanley Cup Winner Pittsburgh Penguins
Player Team Pos GP G A P
1 Evgeni Malkin PIT C 82 35 78
2 Alex Ovechkin WSH L 79 56 54
3 Sidney Crosby PIT C 77 33 70
2007-2008 Stanley Cup Winner Detroit Red Wings
Player Team Pos GP G A P
1 Alex Ovechkin WSH L 82 65 47
2 Evgeni Malkin PIT C 82 47 59
3 Jarome Iginla CGY R 82 50 48
4 Pavel Datsyuk DET C 82 31 66
2006-2007 Stanley Cup Winner Anaheim Ducks
Player Team Pos GP G A P
1 Sidney Crosby PIT C 79 36 84
2 Joe Thornton SJS C 82 22 92
3 Vincent Lecavalier TBL C 82 52 56
4 Dany Heatley OTT R 82 50 55
5 Martin St Louis TBL R 82 43 59
6 Marian Hossa ATL R 82 43 57
7 Joe Sakic COL C 82 36 64
8 Jaromir Jagr NYR R 82 30 66
9 Marc Savard BOS C 82 22 74
10 Danny Briere BUF R 81 32 63
11 Teemu Selanne ANA R 82 48 46
2005-2006 Stanley Cup Winner Carolina Hurricanes
Player Team Pos GP G A P
1 Joe Thornton BOS, SJS C 81 29 96
2 Jaromir Jagr NYR R 82 54 69
3 Alex Ovechkin WSH L 81 52 54
4 Dany Heatley OTT R 82 50 53
5 Daniel Alfredsson OTT R 77 43 60
6 Sidney Crosby PIT C 81 39 63
7 Eric Staal CAR C 82 45 55

3 behavior changes to increase team performance

Image by Marc WathieuIn addition to working on a new Vision (more on this in an upcoming post) and establishing new strategies, I’m operating a small cultural transition.

“Culture eats strategy for breakfast” – Peter Drucker

Our organization’s culture is “collaboration / cultivation” (from The Reengineering Alternative: A Plan for Making Your Current Culture Work) and like other organizations with a similar culture (and despite our success), there are a few areas for performance improvement.

As such, I believe there are 3 behaviors that are preventing our organization and the various teams from reaching the “High Performance Team” level (The Wisdom of Teams: Creating the High-Performance Organization). My attempt to increase the teams’ (and the entire organization) performance level is by focusing on the following 3 behaviours:

  1. Setting clear agreements
  2. Eliminating gossips
  3. Operating with integrity

Why focus on these 3 behaviors?

Let me start with a simple example to highlight what typically happens in many (including ours) organizations. You will certainly quickly understand why this is dysfunctional and can easily lead to sub-optimal performance. I invite you to follow a typical conversation…

  • Sarah: “Mi Mark, I’ve been having issues with payments from a customer. Can you help me?”
  • Mark, in the middle of typing an email: ” Sorry, I wasn’t listening. You need help with something Sarah?”
  • Sarah: “Yes Mark, we have sent reminders to your customer but still haven’t received any payment. Since you are the account manager for this customer, I was wondering if you can help me?”
  • Mark: “Yeah. Well, of course. What do you need me to do?”
  • Sarah: “I don’t know. Maybe you can give them a call to see why they aren’t paying their latest invoice.”
  • Mark: “OK. I have a few things to take care of today. I should be able to help you”.
  • Sarah, walking away: “Alright. Thanks.”
  • [3 days later]
  • Sarah, talking to herself: “I can’t believe it. I asked Mark to help me with something important and he still didn’t get back to me. Doesn’t he understand that receiving payments is important for our company. It’s always like this with him, he says “yes” but never does anything.”
  • [Sarah enters the coffee room]
  • Mary, smiling: “Hi Sarah. How are you today?”
  • Sarah, clearly upset: “Not good. Mark is so unreliable. I asked him to help me contact a customer and he still hasn’t done anything. It’s been 3 days already.”
  • Mary, nodding: “I understand what you are saying. I’ve asked him to contact a customer to invite them to an upcoming conference and he still hasn’t done anything. It’s over 2 weeks already.”
  • Sarah, pouring milk in her coffee: “Why is it that we have to do everything around here?”
  • Mary, approving: “You know, Mark is not the only one. Do you know that I’m waiting for Don to submit new content for the web site? It’s been 10 days already and Don hasn’t done anything. I don’t know what to do!”
  • Don, entering the room to get a coffee: “Good morning ladies!”
  • Sarah, walking away with a cup of warm coffee: “Good morning Don. Have a good day!”
  • Mary, smiling to Don: “Hi Don, how was the hockey game last night?”
  • [For 15 minutes, Don and Mary continue their conversation about the hockey game]
  • Mary, walking away with a donut and a coffee: “Nice talking to you Don. Have a good day!”

I doubt that these conversations only take place within our organization but what I’ve noticed is that they are detrimental to high performance. Here’s what’s wrong with this story:

  • Lack of clearly defined agreements – who does what? by when?;
  • Absence of difficult conversations – when commitments are broken, people don’t have open discussions around the situation at hand;
  • Talking to others about someone else’s issues – people resort to involving third parties in a situation that would better be resolved between those who had an agreement;
  • Not living up to the promise – commitments are taken lightly and there are no consequences for not delivering on them.

So here’s what I’m proposing to the teams in an attempt to take the organization to the next level.

Setting clear agreements

It is critical to establish clear agreements in order to avoid disappointment and mis-trust. To obtain a commitment and make sure that people have a true agreement, it is critical to make a clear proposal that can:

  • Be accepted in full;
  • Be rejected completely;
  • Be renegotiated.

Once the agreement has taken place, each party must then honor its commitments.

Eliminating gossips

Gossip is idle talk or rumour, especially about the personal or private affairs of others. It forms one of the oldest and most common means of sharing (unproven) facts and views, but also has a reputation for the introduction of errors and other variations into the information transmitted. The term also carries implications that the news so transmitted (usually) has a personal or trivial nature, as opposed to normal conversation […] The term is sometimes used to specifically refer to the spreading of dirt and misinformation – Wikipedia.

Instead of pretending to address a situation by involving a third party, eliminate gossip and go directly to the person with whom there is an issue and work at resolving it with them.

Operating with integrity

integrity is the inner sense of “wholeness” deriving from qualities such as honesty and consistency of character. As such, one may judge that others “have integrity” to the extent that one judges whether they behave according to the values, beliefs and principles they claim to hold – Wikipedia.

For me, integrity is very simple as it means to “Do what I say and say what I do”.

Finally, in the possible event that someone can no longer deliver on their commitment, they must inform the other party as soon as they realize they won’t meet their commitment and re-open the agreement.

This may seem trivial and very simple to implement but I doubt any organization has actually been able to implement these behaviors on a large scale. I trust that we will become a highly performing organization once we are successful at doing this.