The next step in creating a performance management system that will drive employee performance is to encourage risk taking.

Find out how!

"Encourage all of your employees to take reasonable and calculated risks. Be there to support your employees, who have taken risks, when things do not turn out as you would have liked. (Try lots of things keep those that work)."

Encouraging and supporting your employees to take risks is about encouraging innovation in your organization. Success from innovation comes from trying lots of things and keeping those that work, in general you can assume three out of every ten ideas you try will be good. The more things you try the more success you will have.

For your performance management system to drive employee performance you will need to encourage all of your people to try lots of new things and not be overly concerned when things do not work.

Risk Aversion

Many people “railroad” new ideas out of fear of what might go wrong; here are a few pointers to mitigate your fear

1. Use a trial, test an idea with a small group and see what actually happens
   
   
2. If a trial is not suitable, determine up front what might go wrong, then track these things closely after implementation
   
   
3. Change the burden of proof from the idea initiator to the objector; make it such that the person who wants to “railroad” the idea has to prove it wont work and not through fear of failure.
   
   
4. Don’t seek approval from too many people, the more people you ask for permission the less chance the idea will have to succeed.

• Risk in a Sales Environment
  
  One of your employees develops a plan to improve your sales performance by trying 5 new sales techniques, you review the plan and it passes a test for “reasonableness”.
  
  Your employee works hard and puts in a lot of effort; however, due to a variety of reasons the planned sales revenue from these initiatives is not realized, how would you rate employee performance?
  
  Leadership and performance management is about balancing competing demands; firstly you have a need to see results - tangible business results which conflicts with contemporary thinking about managing innovation where you need to reward the number of tries and effort.
  
  As a leader you need to encourage your people to take try new things and include the number of tries in your assessment of employee performance including rewarding them for trying even when their efforts do not realize predicted benefits.
  
  You will do well by rewarding your employee for trying and spending time helping to identify any lessons that might be learnt from the experiment and support your employee to develop a new plan. (Encourage them to keep trying)
  
  
  
• Improving Customer Service
  
  Your business receives a poor customer service score so you set your team leaders a goal of improving customer service by 10 points. One of your team leaders develops a plan and discusses the plan with you, they implement the plan and monitor the implementation; however, the improvement in customer service score is less than expected.
  
  How would you rate the employee performance?
  
  From your performance management session you want to leave the employee motivated to try again, you want to reward the number of tries and obvious effort put into achieve the goal. Though you also need to ensure the employee understands that ultimately outputs are what matters.
  
  A good leader will assess all of the facts, the employees past performance, experience and other achievements before making a final decision. All things being equal this employee would get a rating of about 80% plus you will work together to determine how the employee can develop their next plan and may consider additional training or a mentor.
  
  
  
• Process Improvement
  
  One of your employees initiates a process improvement initiative to improve your business processes with an expected outcome of 10% improvement, your manager gets wind of the initiative and bakes the savings into your budget (They do this sort of thing) the employee seeks suggestions from the team, which includes documenting work procedures, updating training materials and a rage of other initiatives.
  
  The employee works hard, doing their current job well and delivering the updated documentation and training materials; however the forecast savings are not realized inline with budget, how do you assess the employee performance?
  
  You performance management needs to consider that employee is doing their current job well, which makes them a good employee and you want to keep them motivated, they used their initiative to get the project going and involved the rest of the team.
  
  You need to reward them for a range of positive behaviors and encourage them to have another try, this time with some additional process improvement training and some support from someone who has the experience. (Innovation is about rewarding the number of tries, management is about outcomes – leadership is about balance)
  
  
  

Pitfalls in Performance Management

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