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Attention All CEOs: Torpedo the Performance Review – Try the “W5” Instead

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The loathed performance appraisal is raising its ugly head again across corporations. Many companies that halted reviews during the pandemic now have employee performance in their crosshairs. The Dreaded Performance Review Makes a Comeback appeared as the lead article in the Wall Street Journal’s C-Suite Strategies section on September 19, 2022.

Meta Platforms (Facebook), Google, McKinsey, CarParts.com, and Goldman Sachs were identified as ones where performance reviews are returning. It’s a big mistake. Performance reviews at most companies, as conducted for decades, is an inherently flawed process. There is, however, a better solution for managing performance.

What’s required for any business that seeks to serve its clients well and grow? A group of motivated, high-performing people is a necessary component. And how do most businesses monitor the performance of its people? An annual performance review is typically used. And who feels the performance review process works well? Just about no one!

Consider these facts:

  • Employees – Only 13% think performance reviews are effective.
  • Managers – 70% of managers admit they have trouble giving a tough performance review.
  • Human Resources – 58% of HR executives grade their performance review process a grade of C or below.
  • CEOs – Only 6% of CEOs think their performance review process is effective.

Clearly all the stakeholders of the annual performance review see the process as broken. If that’s the case, isn’t it time to obliterate – instead of bring back – the traditional performance review?

Why don’t companies blow up their performance review processes? Three reasons:  1. Because it is necessary to give feedback on performance and this provides a mechanism for the exchange of feedback; 2. Because (pre-pandemic) we’ve always done performance reviews before; 3. Even if we acknowledge performance reviews don’t work well, we don’t have a better solution for delivering performance feedback.

I’m all about giving and receiving feedback, improving performance and fanatical about creating performance-oriented cultures. But I’m adamantly opposed to the annual performance review process, which sadly is the antithesis of high performance.  So, what can companies do differently?  I suggest the W5 meeting.

Five-way view

The W5 (work in 5 directions) meeting is an innovative idea in performance management.  These meetings offer a powerful opportunity to promote self accountability.  Very simply, a W5 meeting is a one-to-one meeting between a team member and the direct manager.  At these meetings, the team member should report a self-assessment on their performance from five directions:  customer, direct reports, peer, manager and self (how they are learning and growing). 

Coaching discussion between manager and direct report

Typically held monthly, the focus of this meeting is about the results the team member is achieving.  It is the team member’s responsibility to schedule the meeting and report in full.  During the W5 meeting, which should be conducted in 30 minutes or less, the team member gives a full accounting of progress on how they are meeting and exceeding the requirements in the five directions as listed above.

The team member provides an overall assessment of how they are delivering, taking accountability for performance shortfalls and reports on a plan to correct any deficiencies.  Both problem areas and success stories are shared.

Specific topics on which the manager can assist are identified, and together a plan is developed.  For both the team member and the manager, the W5 meeting is held in a spirit of collaboration, alignment and coaching for future performance. The manager should look for ways to encourage, support and recognize the team member throughout the meeting, in a genuine way.  The meeting is supported by candor and an open dialogue.

Implementing W5 meetings monthly builds accountability for performance with an eye on what is required for future success.  If W5 meetings are held regularly and with the right intention, the manager will only need to hold team members accountable when they are failing to hold themselves accountable.

Companies that implement the W5 process across the board can discard their annual performance review process.  Using the W5 process provides for recognition of excellent performance. Meanwhile poor performance gets addressed quickly and is not tucked away for a discussion that may occur months later.

There is no ambiguity how work performance is perceived, in the world of W5.  Problem performers find themselves in a pressure cooker, have nowhere to hide and are quickly faced with a choice:  dramatically improve or leave. Mid-level performers are encouraged and coached on ways they can lift their contribution.  Excellent performers are recognized for their superb work.

So, if we are committed to growth, extraordinary results and a performance-driven climate, it’s time to obliterate the old performance review process, substituting it with real time feedback and the W5 process.

 The biggest challenge of W5 meetings is the discipline to initiate and sustain these meetings, which take time.  But what could be more important to leaders and managers than creating a team of motivated, high performing team members that are positioned to achieve sustained results?  After all, taking great care of clients by creating the capability and climate for sustained results is what leaders are paid to do.

If you are getting great results with your traditional performance review process, you wouldn’t be reading this article.  If you want great performance in the future, I encourage you to consider committing to the W5 process.

 

 

What Do Exceptional, Value-Creating CEOs Actually Do?

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Every CEO has six key responsibilities they must embrace. Exceptional CEOs think and act differently as to how they carry out their responsibilities.  They take different actions and deploy practices that create great value. These mindsets and practices can be learned, applied, and mastered.

The first responsibility is set the direction. The accompanying mindset of the highest performing CEOs is to be purpose-driven, to create an exciting vision of the future and to and take the bold actions to reframe the game in your sector.

The second responsibility is to optimize the top leadership team. The prevailing mindset is creating a high performing top team. Hiring, coaching, and investing in team members, who are capable, are candid in addressing the challenges facing the business, and are committed to the company’s success.

The third responsibility is to align and mobilize all to execute. The mindset is shaping a working climate that is energizing, is friction-free so individuals and teams can operate efficiently, and building a culture that reinforces and rewards value creation.

The fourth responsibility is to guide your stakeholders. To be credible, you’ll need to master and deliver one compelling narrative that helps you connect with both internal and external stakeholders and be seen as trustworthy.

Excellent CEOs know they need to count on a wise board of directors. Responsibility #5 is leveraging your board. The mindset is to be transparent about your business and its challenges. To educate and engage the board and embrace a forward-looking perspective.

The sixth and final responsibility is to lead yourself. The hardest job you’ll ever undertake, is leading yourself. The mindset is a commitment to professional growth, of operating with humility and gratitude, and a practice of recognizing and encouraging others, even during challenging times.

Do these mindsets describe how you embrace your six key CEO responsibilities?

When you get better, everyone around you gets better. Go to YourCEOCheckUp.com, take the self- assessment to measure your current performance on these mindsets and practices. You’ll receiver your results instantly.

Then, for more on the practices excellent CEOs deploy to create massive value, go to YourCEOResourceGuide.com to discover what you can do to raise your game and put yourself on the path of becoming the exceptional, value-creating CEO you are meant to be.

What’s the #1 Thing a CEO Should Do to Create Clarity?

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Define a clear company purpose. Operate by that purpose. Align and mobilize others to operate by purpose.

For individuals, your purpose is the overarching guiding principle that gives your life meaning. It’s your unique definitive statement about the difference you are trying to make in the world.

It’s no different for companies. Purpose is the company’s definitive statement it is trying to make in the world. It’s the secret ingredient of extraordinary companies.  CEOs, business unit presidents and owners are well-served making their organization’s purpose front-and-center for all stakeholders.

Why would you want to define your organization’s purpose? In challenging times, a statement of purpose can serve as your company’s rudder. Purpose makes decision-making easier, drives deeper employee and customer engagement along with more fulfillment and happiness.  When it is clear, companies look at problems, opportunities and the world through the lens of their purpose. Having a clear purpose benefits your top team, your people, your customers, your ownership group and your other stakeholders, too.

During the pandemic, your people, customers and others have likely felt adrift. Let your purpose serve as your North Star. A well-defined purpose grounds your stakeholders, enabling them to focus on issues and problems with a sense of hope and meaning.  As businesses reconsider working arrangements and their roles in promoting diversity, equity and inclusion, these initiatives benefit from being tightly led and aligned with your company’s purpose.

No organization or company is too big or small, too young or old, or too specialized or too commoditized to have a purpose.  Every company is capable of having a purpose – and should!

A well-defined purpose statement provides the following:

  • A clear reason for being in business and serving – other than financial performance – that your people and other stakeholders can grab hold of today and in the future.
  • The difference you are trying to make that betters the world.

Purpose is a path to high performance. Here are additional reasons a company should develop and operate by their unique purpose. Consider the proofs:

  • Only 53% of employees feel their organizations were effective or very effective at creating meaningful work.[1]
  • 70% of US adults say it is important to them that their actions help make a positive difference in the world.[2]
  • Purpose is so important to people, 9 of 10 people are willing to earn less money to do more meaningful work. On average, the pool of American workers said they’d be willing to forego 23% of their entire future lifetime earnings in order to have a job that was always meaningful.[3]
  • Companies with high levels of purpose outperform the market by 5-7%, grow faster and have higher profitability. [4]
  • Studies have shown that stock values of purpose-driven organizations outperform others within the same space from 133 to 386%. The research of Jim Collins and Jerry Porras looked back to 1926 and found that purpose-driven companies performed 15 times better than the overall stock market since that time. [5]
  • Companies that choose to put their employees and their customers first are outperforming conventional competitors (who have an eye almost exclusively on profit and shareholders) in stock market performance on the order of 8 to 1. [6]

A powerful purpose statement connects with the heart as well as the head. There should be an emotional, ethical and rational appeal that emanates from a well-defined purpose. It expresses your company’s impact on the lives of stakeholders – employees, customers, shareholders, suppliers, the community and the environment.

Some people get purpose mixed up with vision, mission and values. Purpose trumps vision and mission!

A purpose statement is the unique definitive state about the difference your company attempts to make in the world. A vision statement confirms what the company wishes to be like in the future. A mission statement describes what the business is here to do. The business the company is in. It’s objective is internal to provide a focus for leaders and tea members. Values describe how people are expected to behave and operate in pursuit of the vision and mission. While vision, mission and values are important, a firm’s purpose is key. Purpose steers the ship. Vision, mission and values may change over time, but a purpose never does.

Here are examples of company purpose statements:

Bosch: Invented for life, we want our products to spark enthusiasm, improve quality of life, and help conserve natural resources.

BMW: To enable people to experience the job of driving.

Charles Schwab: A relentless ally for the individual investor.

IAG: To help people manage risk and recover from the hardship of unexpected loss.

ING: Empowering people to stay a step ahead in life and business.

Kellogg: Nourishing families so they can flourish and thrive.

REA Group: To make the property process simple, efficient and stress free for people buying and selling a property.

Southwest Airlines: To give people the freedom to fly.

Wal-Mart: Save people money so they can live better.

To craft a purpose statement for your company, start asking questions. You’ll want to reflect on the reason for the company’s existence, who it benefits and the unique contribution it makes to the world.

Consider reflecting on and answering the following questions:

  • Why does our company exist? Why was our company created?
  • Why does our company do what we do in the here and now?
  • What are the “jobs-to-be-done” we do for our customers/clients? What are the functional benefits of the “jobs-to-be-done” we do? What are the emotional benefits of these “jobs-to-be-done” we do? What is the ultimate value we create for our customer?
  • Why is that important?
  • What is unique about us?
  • What is our “superpower” that allows us to make a distinctive contribution to the world?
  • How do we operate when we’re at our best?
  • If our company were no longer here, what would our customers/clients miss? What would other stakeholders miss?

Now it’s your turn to create your organization’s purpose statement. Gather your colleagues. Keep it to a sentence. Capture your firm’s uniqueness. Capture what you do that is a competitive advantage, without being too concrete or too abstract. Get started!

It may be useful to create several drafts with an expanded group of team members.  What are the “red threads” of your company’s uniqueness that shine through?  Can you find one purpose statement that makes your heart beat a little faster? That captures the essence of what your firm is all about? If you can’t, you’ve got more work to do. If you have, congratulations!

Now the challenging part begins. How will you bring that purpose statement to life? Having it on a poster on a wall or on a coffee cup doesn’t do it justice. Your people will need to internalize your purpose, and be able to recite it if you were to call them at 3 am (not suggesting this test). Once you’ve landed on your purpose, you will want to evaluate current company practices to see if they pass “the purpose test”, too. It should be used when tackling an issue where a decision must be made. Alternative choices should be weighed using the purpose.  “If I choose option A, is that consistent with our purpose? How about if I choose option B?”

If you don’t have a defined purpose, you are missing a huge opportunity to lift up the performance of your people and company in so many areas. CEOs who take the time to clarify and operate by purpose don’t regret the decision. Leading by purpose makes work and life so much simpler.

In upcoming posts, I’ll share more ideas for bringing that purpose statement to life.

For more information on purpose, check out bestselling book, Reinvent Your Impact: Unleashing Purpose, Passion and Productivity to Thrive

[1] Deloitte Insights – 2019 Human Capital Trends – From Employee Experience to Human Experience: Putting Meaning Back to Work

[2] Gallup Workplace – What Millennials Want is Good for Your Business – Jennifer Robinson, March 22, 2019

[3] Shawn Achor, Andrew Reece, Gabriella Rosen Kellerman and Alexi Robichaux – Harvard Business Review, November 6, 2018

[4] Top CEOs Have Realized Companies Need a purpose Beyond Profit – Claudine Gartenberg and George Serafeim, Aug 20, 2019, Harvard Business Review

[5] Leading from Purpose: Clarity and the Confidence to Act When it Matter Most – Nick Craig

[6] It’s Not What You Sell, It’s What You Stand For: Why Every Extraordinary Business is Driven by Purpose – Roy Spence

Positively Impact Others in the Chaos of Life

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When the men’s small group that Dave Hemink is a member of collectively decided to mine for and define their individual life purposes, just over two years ago, little did Dave know how valuable that exercise would be in the throes of the COVID-19 crisis.

At the time, Dave was a division president of a $1B global publicly-traded medical device company. As a seasoned leader with twenty-five years of experience running companies, he knew a lot about leadership. The father of two teenage girls and married to his amazing and beautiful wife, Kristin, for nearly twenty years, Dave had a loving family and an important job. Once Dave’s purpose was clarified, it suddenly opened an entirely different way of thinking.

Purpose is the overarching guiding principle that gives your life meaning.  Most people haven’t clarified their purpose. Together with the other men in his group, Dave reflected on some deep questions, his life experiences, his values and gifts.  Dave said, “We looked within and clarified our purposes. Your purpose is deep within you, it is there. It’s up to each person to find it.”

After thoughtful consideration, Dave defined his purpose as: “I live life to break barriers, create paths and enable people to live purposeful lives, that positively impacts others, while living in the chaos of life.”

When the COVID-19 crisis hit the US in full force in March of 2020, we all experienced chaos in our lives. Dave included. Dave is the chief executive officer of Nonin Medical, a Plymouth, MN-based medical device company, that has been a world leader in innovating and manufacturing pulse oximetry systems for 35 years.  The mission of the company is to improve the quality of people’s lives throughout the world by expanding the capabilities of noninvasive measurements.

The pandemic and resulting public health crisis have created a shortage of pulse oximeters, which have been identified by the World Health Organization (WHO) as a critical clinical therapy in treating COVID-19 patients, citing: “Oxygen therapy is a major treatment intervention for patients with severe COVID-19. All countries should work to optimize the availability of pulse oximeters and medical oxygen systems.” Dave and the Nonin team provide the equipment needed for healthcare workers and patients on the frontlines of this global pandemic.

“In the past few months, Nonin has seen a dramatic increase in demand for its mobile pulse oximeters. I don’t think anybody could have predicted what we are seeing today”, said Dave. “We’ve been fighting this from day one and the global demand for pulse oximetry products globally has been unprecedented,” Dave further stated. Nonin Medical’s executive chairman, Phil Isaacson, added, “The people who have been buying from us in the past are now trying to buy 10 times more. We can’t keep up.”

Dave and the Nonin team are literally working around the clock, expanding manufacturing capabilities and strengthening their supply chain to provide pulse oximeters to healthcare professionals worldwide to diagnose and treat COVID-19. “We have product lines that are up 2,600 percent,” reported Hemink.

Dave said his purpose helps center him during this unprecedented period. “My purpose is front and center now. Your purpose is magnified at different times of your life. You live it – it is embodied in you in times like these,” said Dave.

“As a leader, you have a lot of tools at your disposal, I compare it to a mechanic’s Craftsman red tool chest. Some of the tools you use daily, some of the tools you will never use, until one day, you have a unique job that requires a unique tool.  That is where we are today.  The COVID-19 crisis has our team reaching so far in the back corners of the tool chest.  That chaos component is amazingly real. We’ve got supply chain issues and challenged suppliers. We are an essential employer and we’re committed to keeping our team members safe and well. We have customers who are demanding and desperately in need of product. Every hour it is something different. What I’ve learned is you live your purpose – and that tool chest – to guide you. To provide the team with the path”, Dave continued. “I think of purpose as the grout between the tiles. It holds everything together.”

When asked how he uses his purpose to lead his team, Dave replied, “I’m using it to create calm during the chaos, so I can give our team members the confidence to act. They are doing heroic things. The definition of a hero is an ordinary person in an extraordinary time who takes action. That describes our team members.  They are having to really stretch – sometimes doing things they’ve never done – for the greater good.  Figuring out as we go, as we’re driving 120 miles per hour. For example, helping our suppliers open shuttered factories in the Philippines and India. Finding new sources of raw materials to meet our customers’ demands. Figuring out how to process and ship orders even faster.  Working with the FDA proactively and creatively to accelerate new product approvals. We’re doing this and more, all in real time. I couldn’t be any prouder of the team and the amazing work they are doing.”

If meeting the dramatic demand for Nonin products wasn’t challenging enough, while ramping up their production capabilities, Nonin Medical has had to deal with additional chaos, when one of the first diagnosed cases of COVID-19 in Minnesota was an employee of the company. “Suddenly, that individual, as well as 10% of the Nonin team, were in proactive quarantine, just when Nonin needed every hand on deck. Thankfully, no other team member to date has tested positive and the individual who tested positive has recovered, is healthy and back to work,” said Dave.

Christine Horton, Nonin’s vice president of global marketing states, “Great leaders and individuals grow from adversity and chaos. I see Dave as someone who is positively impacting others through the chaos of life. He’s navigating the company, the leadership team and individuals through this adversity in order to better everyone. It hasn’t been about Dave, about his title or any of that. He could have any title and people would follow him. He doesn’t need to lead with his title. They are following because they feel empowered when they follow him. He’s navigated us through so many obstacles, where we could have had failures, we’ve found opportunities. We are finding solutions. He’s navigating us to make the entire company better and very, very rapidly. In a very short time.”

“The character of a leader is defined in the time of a crisis. This is who we are and what Nonin is all about. It’s a new frontier and we need new solutions. We’re flexing our adaptable muscle for those on the frontlines. This can be – and will be – our finest hour. Having a clearly defined purpose is my rudder in the chaos of life, so I can provide the leadership all our stakeholders desperately need,” Dave said.

When leaders lead with a clear purpose, everyone benefits. It serves as your North Star, the overarching principle that gives your life meaning. Would you want to be led by someone without a purpose? What if that leader, without a clear purpose, was you?

Leading with purpose provides a path, that positively impacts others in the chaos of life. In today’s unprecedented time, while leading Nonin Medical, Dave Hemink is creating great impact.