Friday, November 23, 2012
Case Study: Standards of Performance
The Corpus Christi Caller-Times Newspaper was having difficulty with its financial reporting and its payroll costs for the financial area seemed high.
After spending a few weeks with the personnel in the departments and reviewing operations, we felt like there was poor coordination between the various accounting functions and that there was duplication of effort. I was pondering an approach to address these challenges when I ran across an American Management Association workbook on Standards of Performance. It suggested that a job should be broken down into responsibilities that related directly to organizational goals. Further it said that these responsibilities should have standards set that related directly to an employee’s job performance1. The article also suggested job appraisals should be objective and directly related to the standards set.
One of the most basic employee needs is the need for security and this need is a key motivational factor in the work environment. It seemed that the standards of performance would be a good way to provide the company with a clear path to achieving its goals while at the same time providing the employees with the ability to be secure in their position if they met their standards of performance.
Clearly, implementing the standards of performance program would be difficult. First, the employees were suspicious of any new program that focused on job performance. Second, to implement the program meant that we would have to sit down with each employee and understand how each task they performed related to the department’s success and then set a mutually agreed upon standard for each task.
The employees were set more at ease when they were told the standards would be the basis for performance reviews and that standards would be mutually agreed upon. During meetings with each of the employees, we found that these individuals had a good feel of work that was being performed needlessly and of how the departmental objectives could be met. The result of the exercise was a group of employees that clearly understood their jobs and how to be successful in the job by meeting the standards set for each task.
The implementation of the standards of performance program resulted in a significant improvement in financial reporting and management of the company’s financial assets. We also identified and eliminated information gathering and reporting that was either duplicated or not needed at all. Additionally, as folks left or retired, we found that we were doing about twice the work more effectively with half the staff. We also found that the employees had a real sense of security and wellbeing because they understood the specific requirements to be successful in their jobs and received recognition as they achieved success.
This program also allowed us to understand the value of each job function and to establish benchmarks for pay rates that were meaningful to the employees and to the company.
From that point forward, I used this standards of performance program every opportunity I could. I felt like it worked for the employees and the company.
I think the greatest standards of performance success occurred at the Houston Chronicle. It was also the most difficult implementation. In my areas of responsibility there were about 1,000 employees and about 2500 independent contractors.
The Houston Chronicle was very successful and had (during the same week I was named VP) just purchased the assets of the Houston Post, leaving the Chronicle the only major newspaper in the nation’s fourth largest city. The managers rightly felt like they had performed well enough to win a difficult market battle. As a result these seasoned managers felt like a standards of performance program would not bring benefits worth the efforts of implementation.
I felt like we had a lot of tough competition and that to garner a greater market share we would have to introduce new products and be very focused on organizational and financial goals. I really felt a standards of performance program would help with the focus.
The managers didn’t share my optimism. Indeed the inertia was so great that I had to tell the division heads that I would not approve any performance reviews or salary adjustments if they were not accompanied by standards of performance for the position being reviewed. I said that this rule would go into effect in six months. Within six months the Houston Chronicle had a standards of performance program for every position in the advertising, circulation and marketing divisions.
To their credit, once the program was implemented, the managers took it to the next level by including training classes that would have to be completed for the individuals to hold their position and progress to new, more challenging positions. Bonus programs were tied directly to the same objectives as the standards of performance.
From the time of implementation to my departure seven years later, revenues increased by 60% and company profits more than doubled. That does not happen without folks who understand what must be done and are focused on successful execution.