Managing Human Capital for Optimal Performance
By John Essick
Welcome to Spencer Trask Perspectives, a monthly interview series with our CEO William Clifford and writer John Essick. Mr. Clifford has generously agreed to share his unique insights and expert opinions on topics such as business development, deal flow, C-suite management, startup culture, entrepreneurialism, and more. We welcome your feedback, and encourage you to submit questions to askST@spencertraskco.com for Mr. Clifford to potentially answer in future articles.
Consistent and thoughtful performance reviews achieved through open communication dramatically impacts an employee’s accountability, productivity, creativity, and quality of employment. In this inaugural edition of Spencer Trask Perspectives, I discuss with Bill Clifford, CEO of Spencer Trask & Co., ways that managers can instill a stronger sense of purpose throughout the workforce and inspire employees to maximize their skills, talents, and potential.
John Essick: Statistics show that organizations that provide employees with regular performance feedback have lower turnover rates and more highly engaged employees. How does management differentiate between micromanaging and giving their employee the space to assume greater professional responsibility?
Bill Clifford: I feel it’s important for organizations to understand that providing employees with regular performance feedback doesn’t necessarily mean regular and frequent formal performance reviews. Good managers give performance feedback each and every time they observe an employee doing a task or activity that exceeds the expectations of the organization.
Really, it’s the timing of the recognition that has a more lasting benefit. Waiting until a scheduled formal performance review date, which has been the traditional method of performance management, reduces the impact for both the manager and the employee. A long delayed mention during a formal performance review is much more indicative of a long distance involvement and the issue in question may actually have long been forgotten, or the opportunity for employee feedback blunted.
On the other hand, the employee will in no way feel that the instantaneous recognition was micromanagement — but instead welcomes the feedback as an important component of their performance and career development.
JE: Things can change quickly in today’s business environment. How do you recommend managers prepare for and react to guide employees through unexpected developments?
BC: It’s true that in many cases of employee performance, there can be gray areas subject to interpretation or expectations that change during the course of a project or assignment. In most cases, the tried but true method that is most effective in terms of monitoring employee feedback is, “inspect what you expect.”
Managers must set clear expectations at the beginning of a project and build themselves a small but recurring role in the overall project or activity. In this way, they can still observe individual performance at key delivery points — critical deliverables, presentations, key meetings, etc., yet also be prepared to step in at any point during the process.
By doing so, if a manager sees performance areas that need addressing, he or she can react in the moment, not at the end when the result has impacted the employee and possibly others on the team.
JE: Do you think organizations should turn to performance management systems that use technology to establish a continuous process of reviewing employee performance and measure key performance indicators?
BC: Performance management systems are valuable software tools that help organizations organize and manage the ever-growing complexities of the HR function. They provide efficient methods to assist in the overall management, flow and timing of the performance review system and can help implement a 360 degree review to encourage leadership development. Performance management systems also are extremely helpful in maintaining compliance with Federal and State regulations regarding employee rights, etc.
One often overlooked benefit of performance management systems is that they provide a valuable function known as a Skills Inventory, simply an inventory of all the skills possessed by the employees in your organization. How many times have we asked ourselves a question such as, “Do we have anyone who has a degree in accounting who also speaks fluent Japanese?” This might be an extreme example, but imagine that a quick review of employee inventory presents not only a great opportunity for an in house, loyal employee to advance within the organization, but also negates the need to recruit an expensive outside hire.
However, performance management systems require an organization-wide commitment from top to bottom. The success of such systems will solely be determined on the basis of an organization’s complete commitment to using this tool as means of engagement and growth.
JE: What level of involvement do you think an employee should have in determining the performance benchmarks for their position?
BC: Including employee feedback in developing the performance benchmarks for their positions is an absolute must for many reasons — not the least of which is employee morale.
Even though many positions are graded against industry standards, and may have benchmark performance numbers already associated with them, in certain situations there may be extenuating circumstances that warrant a conversation with the employee performing that task. Demonstrating sensitivity to the benchmark situation, perhaps by agreeing to revisit the employee’s performance against the benchmark standard at some reasonable future date, is likely to gain greater cooperation in the performance of that task.
(Note that I am recommending a give and take conversation based on extenuating circumstances, not a negotiating session where the fundamental tenets underlying the industry standard are discounted!)
JE: Managers and leaders in technical innovation industries must encourage innovative thinking and a degree of risk-taking from their employees that could adversely affect the employees’ performance reviews. What are some special challenges that must be overcome in order to foster this contrarian thinking?
BC: Managers in the Innovation industry are different by definition. They are probably managers because they were successful innovators themselves. For them to successfully lead innovation teams they have to follow a different cookbook. There is no magic recipe for breakthrough innovation, so the challenge for these managers is to create breakthrough ‘innovation environments’ — environments in which select individuals are free to pursue and express the limits of their technological visions (relatively) unburdened by the constraints of deadlines, budgets, performance reviews, etc.
Rather than think of managing these resources, leaders in the innovation industry must think of enabling these resources. These individuals should not be burdened with the fear of career risk or failure — all of these innovation vision ventures are high risk/high fail ventures by definition and cannot be measured by traditional yardsticks — and certainly cannot be managed as such.
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About William Clifford
William (Bill) Clifford is Chief Executive Officer of Spencer Trask & Co., a privately owned advanced technology incubation firm. Prior to joining Spencer Trask & Co., Mr. Clifford served as Chairman of the Board and Chief Executive Officer at Aperture Technologies Inc., General Partner of The Fields Group, and General Partner of New Vista Capital. He is also the former President and Chief Executive Officer of Gartner Group, the world’s leading authority on the information technology industry, user and vendor technology strategies and market research. During his tenure at Gartner, annual revenues increased from $175 million in fiscal 1993 to $780 million in fiscal 1999.
Mr. Clifford currently serves on the board of directors of Cybersettle Inc. and SWK Holdings (SWKH.OB). He has been featured in CEO Magazine, Leaders Magazine and Forbes, and is a keynote speaker and panelist at numerous Technology Industry conferences.