Praise and Punish
The final step is to see how well people are executing against their objectives.
I try to be very pointed in my own appraisals. I don't mean destructive, but I try to be as precise as I can be on people's development needs, and if I go back the next year and find out they have got the same development needs, I don't feel very good about myself.
But again, it is not a one-off. There is constant feedback and coaching. We have an intense personnel process in which we are constantly evaluating people to see not only how well they are performing in terms of executing what they have agreed to do, but also their behaviorare they open with the people who report to them, working well with others in the organization and the like.
We basically graph their performance on a simple grid with performance on the vertical access and behavior on the horizontal one. We want them to score on the far right-hand side of the grid, and we work with them extensively to help them get there. And we have an intense budgetary process where we look to see whether people meet their commitments or not. So it's reinforced almost every day, although in different ways.
We're always calibrating against those three processes and looking to see how people are executing against them. Eventually, it becomes part of the culture. For example, people know we don't want a strategic plan without seeing how it can be executed.
And if they execute, they are rewarded. We differentiate in pay, options, promotions, bonuses and everything else, based on performance. The differentiation occurs by virtue of an honest appraisal system where we determine if people are executing.
I think our approach tends to attract better people, and that's what you want to have happen. I think it builds a culture where people look and see that the company is rewarding people who perform, people who execute. That's what I think Jack Welch did at GE, and that's what I've tried to do. Good people want to be a part of cultures that differentiate.
Paul B. Brown is the author of 13 business books, including the international bestseller Customers for Life. Doubleday will publish an updated version of the book, written with Carl Sewell, this fall. Please send comments on this story to firstname.lastname@example.org.