Archive | October, 2010

Learnings from W.L. Gore: Compensate for Contribution

In 1995 I was invited to join a design team, charged with 1) examining how the Ken Blanchard Cos. operates and 2) facilitating large company meetings to build consensus and inspire action to make agreed to refinements. The project took 14 months of hard work. It was a tremendous learning experience with my five design team colleagues, and absolutely made me a better consultant!

One of the companies we studied was W.L. Gore, widely regarded as one of the best companies on the planet to work for. Best known for Gore-Tex – though most of their revenue comes from medical devices and medical clean room technology – today Gore is a $2.4billion global business with just over 8,000 associates.

Design team members were fascinated with many of the aspects of Gore’s culture and business (it was hard to differentiate between them, which is a big reason why the company is so highly regarded). Three of their approaches stand out to me, now 15 years later:

  1. They have a very flat organization, with no hierarchy or formal bosses. Founder Bill Gore called it a “lattice organization,” where committed, competent people worked with each other to create products that solve customer problems. They didn’t need a “boss” to direct their work.
  2. They keep facilities small to enable employee connections and employee influence of decisions and actions. Typically when a facility (which usually combines sales, R&D, and manufacturing) reaches 300 associates, they begin planning to split the facility into two smaller facilities. Why? Bill Gore said that once you reach 300 people on a site, you lose personal connections. The Gore culture highly values employee involvement, and smaller facilities helps that happen.
  3. They separate compensation from contribution. Associates are ranked by their peers for their contributions, and compensation is based upon the company’s success that fiscal year and on the associate’s ranking.

To learn more about the W.L. Gore company, please read WSJ’s Gary Hamel’s excellent two-part interview with Gore CEO Terri Kelly and the Great Place to Work Institute‘s overview of Gore, a 2009 “Great Place to Work” award winner.

A recent conversation with a client refreshed my memory of Gore’s unique compensation approach. The client’s organization had a classic performance appraisal structure, where employees were placed in a normal distribution of performance rankings. She has five exceptional performers across her 10-person team, yet because of the normal distribution, only ONE of those exceptional performers would be granted a “five out of five” rating. The “5 star” ranked players receive the greatest pay increase. “It’s so frustrating,” she related. “Why should four of my five great performers have their contribution capped because of this stupid system?!?”

I shared Gore’s successful approach of separating compensation from contribution. I explained that every associate at Gore is expected to commit to projects and goals, and to contribute to the company’s success by delivering on their commitments. Annually, their contribution is ranked by associates and compensation decreed by a cross-functional committee. My client loved the idea – but wasn’t sure if her company would consider such a significant shift in their compensation plan.

Many companies are tied to this antiquated approach that ties compensation to a normal distribution. But consider this: can you imagine how much greater performance and higher employee work passion would result if you had a team of all “A+” performers? You can – by separating compensation from contribution.

Evaluate employee contribution FIRST – let them know where they stand compared to benchmark performers. Give them a contribution ranking on a 1-10 or 1-5 scale. THEN explain, given the company’s recent fiscal year performance, how their contribution ranking translates into the upcoming year’s compensation plan.

You know, this just might work!


Disclosure of Material Connection: Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

Employee Reviews: Include Values Demonstration AND Performance Feedback

Many organizations manage performance on a calendar year plan, so this is the time of year when performance reviews occur. Your leaders, managers, and employees need regular performance feedback! Reviews let staff know where they stand on goal accomplishment, contribution, and team work.

Too often, reviews aren’t done well — or even done at all. At a recent keynote event I asked how many attendees have at least an annual review by their boss – more than half said they did NOT. Without regular feedback and insights on how they are perceived by their boss, peers, and customers, employees are left to wonder “who cares about what I do around here?”

Do your employees a favor: provide them with honest feedback, at least once per year, on their accomplishments, missed commitments, opportunities for development . . . AND on their demonstration of the organization’s desired valued behaviors.

From Performance Reviews to Contribution Reviews

With our culture change clients, we coach them to change “performance reviews” to “contribution reviews.” Contribution reviews include feedback to team leaders and member about the extent to which they are seen to demonstrate desired valued behaviors, as well as about their performance for the time period in question.

Note that it doesn’t matter what you call these reviews, so long as they include BOTH performance appraisal and assessment of values contributions.

In order for contribution reviews to be effective conversations, expectations must be clear for performance and for values. Most of our clients clarify performance expectations well in the planning process. Some clients use SMART goals, which ensure performance expectations meet the SMART criteria (specific and measurable, motivating, attainable, relevant, trackable and time-bound).

Values clarity is much rarer – and Blanchard’s culture change experts have learned how to help clients make values measurable. If you haven’t already, please check out my post on “Making Your Company Values Measurable” for more details on this vital step.

Translating desired valued behaviors into effective measures as part of evaluating contribution takes a bit of effort, yet it will help clarify the kind of corporate citizenship you want every organization member to demonstrate, day in and day out.

Creating Values Standards with Actionable Feedback

In order to be actionable by the receiver, values feedback must be provided in the form of standards: exceeds standard, meets standard, and needs improvement. Let’s take an example. One client defined a desired value, alacrity, as “our enthusiastic eagerness to get the right things done quickly. We honor the pace of business today and get things done promptly and efficiently. As active risk takers, we choose action over inaction. We cooperate to create open systems and communications. We learn and adapt on a daily basis, striving for excellence, without letting the pursuit of perfection slow us down.” Behaviors for this value were refined to fit the standards rating for annual reviews in this way:

Exceeds Standard
1) Holds self and others accountable to high standards.
2) Often exceeds and consistently meets deadlines committed to.
3) Assists team members with their projects regularly.

Meets Standard
1) Meets minimum standards for work performance.
2) Consistently meets deadlines committed to.
3) Assists team members with their projects when able.

Needs Improvement
1) Rarely exceeds standard for work performance.
2) Misses deadlines on a regular basis.
3) Rarely seen assisting team members with their projects.

Like-numbered items are ranked either “exceeds, meets, or needs improvement.” A player might deserve an “exceeds” ranking on item one but a “meets” ranking on items two & three. To ensure an accurate assessment of valued behaviors, clients gather perceptions from bosses, peers, and even customers in a custom values survey, typically administered twice each year. Data from respondents is utilized to gauge values demonstration in their contribution reviews.

If your organization does annual reviews for every staff member, that’s good. If annual reviews just focus on performance, you’re missing out on a key differentiator in today’s global economy: values alignment.


Disclosure of Material Connection: Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

The Power of Intention on Employee Work Passion

You’ve seen employees in your workplace that are positive, enthused, and productive – and employees who are not. How can leaders create an environment where all employees are passionate about their work, their customers, their peers, their bosses? I’ve recently seen initial results from literature reviews and research by colleagues* at the Ken Blanchard Companies on the factors that influence employee work passion.

For organizational leaders, their discoveries provide wonderful insight into the impact leaders have on committed, connected employees. A preliminary field test of their employee work passion model was completed this year; the team shared their initial insights with me.

I won’t review the overall employee work passion model in this post; the white paper on their model can be found here. The team defines employee work passion as an individual’s persistent, emotionally positive, meaning-based state of well-being stemming from continuous, reoccurring cognitive and affective appraisals of various job and organizational situations, which results in consistent, constructive work intentions and behaviors.

A primary contention of this model is that intention is a major aspect of employee work passion. The five major employee intentions found in the literature include:

  1. Intent to stay,
  2. Intent to endorse,
  3. Intent to exert discretionary effort,
  4. Intent to use organizational citizenship behaviors, and
  5. Intent to perform.

Leadership policies and behaviors, day to day, directly influence these employee intentions. These discoveries parallel our efforts with culture change clients over the past 12 years! f you’ve been reading my posts here, you know that our proven culture change process enables clients to create workplaces that:

  • Clarify performance expectations and holds all staff equally accountable for goal accomplishment,
  • Clarify values expectations and holds all staff equally accountable for demonstration of defined valued behaviors,
  • Fairly and consistently apply processes, policies, and procedures to all employees,
  • Provide autonomy and flexibility for staff members to apply their discretionary energy at work,
  • Connect staff to customers and each other, and
  • Provide a sense of meaning and teamwork beyond making money.

If leaders create an environment where employees are able to willingly act upon these intentions, a high-performing, values-aligned culture will result. Employees will be dedicated to creating devoted customers, increased profits, and sustainable growth.

The team’s research is ongoing; further studies are required to thoroughly understand the specific impact of strategic leadership and operational leadership on employee well-being and on these positive intentions. Refinement on the current employee work passion survey will be based on these discoveries.

I have been invited to help craft the consultative solutions to help clients close gaps revealed by the employee work passion survey. Our proven culture change process will be a starting point for these solutions, as our successes with closing gaps with that process will serve us well in the employee work passion arena. Look for updates in my blog posts regarding this exciting project!

* Drea Zigarmi Ed.D., Kim Nimon Ph.D., Dobie Housen, David Witt and Jim Diehl


Disclosure of Material Connection: Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

Changing Habits to Enable Culture Change

In a recent session with a client’s senior leadership team, the group finalized the “ready to share” draft of their organization’s desired purpose, values, and valued behaviors. This process is a lot of hard work; they stuck with it and developed a very solid statement.

Once they publish this purpose, values, and behaviors statement, expectations and scrutiny from all staff will increase; this team understands that. As we finished the day, I explained the best practices for them, as senior leaders, to emphasize BOTH performance and values with their direct reports. I described how, in day to day conversations, during field visits, etc. these leaders must change the way they discuss expectations with their staff. “You do not need to spend more time with your staff at this stage, but you do need to change what you discuss and what you emphasize with them,” I said.

I asked one member of the team who is responsible for field operations to serve as an example. He typically spends 2+ hours on field visits meeting with facility managers. I explained,”You must shift your focus with that facility manager from primarily discussing performance metrics and opportunities to balancing performance discussions with how well they and their site leaders demonstrate and reinforce the organization’s desired values.” The blood drained from his face – he said,“I don’t think I can do that! I’ve been doing these meetings the same way for years – I wouldn’t know how to change them.”

Refining Behaviors to Emphasize Values

Typically leaders have well-developed habits for managing staff and expectations. Some of those habits serve them well – and some don’t. During a culture change initiative, leaders need to:

  1. clarify and share specific expectations (as this team is doing with their newly defined purpose, values, and behaviors), and
  2. demonstrate commitment to the purpose, values, and behaviors by acting on them and emphasizing them consistently.

If a leader’s current habits are not developing a values-aligned organization, he or she must change daily practices through development of new habits. Desired habits will enable  leaders to live the espoused values of the organization and to coach and celebrate others doing so each day. Changing daily practices is about creating new habits: clarify desired practices, evaluate current practices, then close those gaps! Research says that developing new habits requires demonstration of new behaviors for 21 days – no time like the present to start!

One suggestion: consider finding a mentor or coach who can help you understand how others perceive you, whether you are being consistent with values-aligned behaviors, etc.

What NOT to Do is as Important as What TO Do

Like the senior leader who told me this week, “I don’t think I can do that!,” identifying how to more effectively lead a values-aligned culture requires a conscious strategy of deciding what NOT to do . . . which will enable time to DO the important things required of the servant leader. One of our most successful culture clients told me, “There is NOTHING more important for me to do than to talk about and reinforce our desired culture!” Early in their change process he spent about two hours per week focused on their desired culture; as the process evolved over a year, he found he spent about 10 hours per week proactively managing their desired culture. He certainly watched key performance metrics but did not micromanage them.

With dedicated effort, your new habits will be comfortable and will generate immense synergy in your organization with a balanced focus on performance and values.


Disclosure of Material Connection: Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

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