Do You Want to Assess Your People? Try The PAEI Code and the 9½ Test!

Possibly the most complicated part of doing business is dealing with people simply because each one is unique and generally speaking, we don’t know how unique unless we assess them in some way. 

I am not and never have been a fan of annual appraisals.  It’s rather like running your business only on looking at the end of year results and hoping that we can make any adjustments that for issues that come to light.  The answer is regular and formal one-to-one meetings. 

These one-to-ones are not to the leader’s agenda.  It is the individual who determines the topics for discussion and the leader listens and makes comment as appropriate.  Not an easy task for the leader to keep relatively quiet but a very important one. 

As I said before, business is or should be simple and it is the interaction with people at which we are not always very competent that often gets in the way and leads to complications. 

Over the years I have come across a couple of very simple and very subjective assessment techniques which I have found invaluable for any leader to use. 

They are:

 

·       The PAEI Code assessment

·       The 9½ rating assessment 

The PAEI method can be used to assess both the business and individuals within it and it stands for: 

• Productivity: the amount of effort being devoted to the business
• Administration: how effectively is the business administered
• Entrepreneurship: what is the level of imagination and innovation?
• Integration: how well are the people engaged and included? 

Giving each test a rating from 1-5, in the early start-up days of the business the productivity rating is very high, administration is generally low, ntrepreneurship rating is again high and as there are very few people integration is usually automatic.

As the business grows and takes on more people the PAEI code changes.  For example, while P is or should still be high, A will have increased, E may well have reduced and I will probably have improved. 

If we asses an individual on the same basis then certain traits will emerge.  For example, an accountant typically will have high P, high A, low E and low I.  Conversely an owner/manager will have a high P rating, low A, very high E and average I. 

That makes for significant differences in approach and using the PAEI code can give a subjective judgement on an individual. 

The 9½ assessment is very simple.  Look at your top team and give them a rating from 1-10 (10 being high) which covers their total influence in the business.

 

The aim should be to achieve a 9½ rating for everyone on the top team which says that you have the right people on the bus, all in the right seats and all facing the same way. 

If, for example, you rate someone as 8, then it is feasible with mutual co--operation, to develop that individual to a 9 or 9½.  If sadly you have a 6 or 7 then it is almost impossible to develop that individual to achieve top rating and some decision needs to be taken. 

Yes, this test is very subjective but it does help to shed light on people’s abilities, enthusiasm, alignment, engagement and all the other great traits which go to make up a good top team member. 

I saw a great item on the web last week:  Conversation - CFO says to the CEO: “If we spend all out time and effort developing people, they might leave”  “True” says the CEO “but if we don’t develop them they might stay” 

These two tests can give you a clue as to whether you want them to stay and add value to the business.

 

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Going For the B-HAG? Break it down Into Bite Sized Bits!

If you have read that great book, Touching the Void by climber Joe Simpson, you will recall that after a near fatal accident, Joe managed to get back to base camp notwithstanding he had a broken leg.  

Joe told the story of this epic journey at a National Vistage meeting in London to a totally enrapt audience.  He had been cut loose by his climbing partner after a fall while climbing in the Peruvian Andes and he fell into a snowdrift which cushioned his fall. 

The problem was that he was on his own and had to get back to base camp somehow.  The only way was to crawl there. 

The point of this tale is that Joe most certainly had an objective, to get to safety and it would be a long, hard and seemingly impossible feat if he were to manage it, with a broken leg, no food and very little water. 

His watch was still working and he gave himself a number of minutes in each case o crawl to a rock or through another snowdrift.  In the end he achieved his objective and made the five miles back to their base camp just before his partner had decided to return to civilisation. 

It was a most compelling presentation and about the only time that I can recall when a Vistage meeting was completely silent! 

This story is, of course, a great metaphor for objective setting in general.  For example, if out revenue this year is, say, £20m and we decide that next year our objective will be £40m, the reaction will be as expected. 

·       “Impossible!”

·       “We don’t have the people”

·       “The market isn’t there”

·       “Our competitors would react” 

and so on, ad nauseam.   

This is not to decry big objectives or B-HAGs (Big, Hairy, Audacious Goals and that is the clean version) but they can be overwhelming to some people and the immediate reaction is to say that it can’t be done, with a list of objections. 

Take an example from Joe Simpson.  He broke down the great objective of dragging himself and hopping the five miles to base camp, which on the face of it was impossible, and gave himself smaller objectives which he could achieve and feel good about each one. 

Taken as a whole, of course, they made sure that he would get back to safety and he did just that. 

Always go for the big one, the B-HAG, energise your people, give them lots of enthusiasm and positivity and some assistance to make sure that you achieve your big objective.  Bite sized objectives go to make up the great achievement.

 

 

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Thinking of Incentives for Your People? Are They Really Coin-Operated?

The vexed question of incentives has raised its head again this week and the problem is that the client can’t decide whether it is commission, bonus, performance related or discretionary or merely a matter of recognition.  In the end he just feels that he needs to encourage the individual to perform better. 

The question to be asked is why does he consider it necessary to pay someone more for doing the job that they were employed to do in the first place and are paid to do anyway? 

The news this week that Lloyds TSB bank has been fined £28M for putting in an “incentive” scheme which frankly bullied the customers into buying products that they didn’t need and didn’t want merely strengthens the argument. 

It may be perceived that I am not a fan of incentives or at least of financial incentives.  The American psychologist Frederick Herzberg said that the real factors which contribute to motivation do not include salary or indeed financial incentives. 

On the other hand people are motivated far more by factors such as achievement, success, and reward in the form of praise or recognition. 

I firmly believe in any case that we cannot motivate people; it is arrogant to suggest that we can.  What we are able to do, however, is to provide them with an environment and a style of management that will encourage them to be self-motivated to perform. 

There are so many examples that justify that statement.  I recall the story of an office worker who had stayed behind late in the evening to finish a task which was rated as very important and, in this case, without being asked to do so.   

The manager was sufficiently impressed by this selfless attitude that he sent a thank- you card and a bunch of flowers to her home.  Six months later a colleague was at the house and noticed that the card was still on display on the mantelpiece. 

The best sales force I have experienced was a large (120 strong) engineering group based all round the UK in a number of branch offices.  That sales force was paid on the basis of flat salary with no commission or bonus or indeed any financial incentive. 

They were, it is true, paid rather over the market rate but they earned their pay without any doubt.  One of the most effective members of that sales force was my old sales mentor, Phil Copp, the Sage of Wythenshawe, who wouldn’t even have understood the need for so-called incentives. 

Perhaps he was typical of the old school; committed, honourable, loyal and hard working and that is no bad thing.  His greatest attribute was that he kept very firmly in touch with all his customers whether they were large or small. 

He would always go in to see the engineer after he had installed our equipment to check that everything was going well and that the engineer was satisfied. 

I would suggest that this sort of follow-up call is not usually at the forefront of the thinking of the commission salesman (or woman).  Their incentive is to make the sale and get the hell out to see another potential customer, not to hang around or to make another visit merely to see if the customer is happy. 

It is a decision for management to make; do we just want sales or do we want satisfied customers who appreciate good service and after-sales service? 

Instead of financial incentives, think of a few ideas to encourage your seals people to think more of giving great service to your customers and ditch those incentives which don’t always do the job anyway. 

To generalise, most people are not coin operated and it is an insult to suggest that they are.  People react favourably to success, praise and encouragement and delivery of that is entirely in the hands of the leadership.

 

 

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Having Difficulty in Communicating? Cut Through the Detail and Focus!

In the many coaching and mentoring sessions that I work on with Vistage members and clients, I frequently find that getting to the root of an issue can be very difficult for many people. 

The issue is that when people in business have a problem to solve or an objective to achieve they generally know far too much about it, the background, the people, the side issues and so on, so that the real issue becomes either cloudy or it disappears entirely in the morass of detail. 

This can lead to reluctance to make a decision simply because the analysis is so complicated that any sensible solution can’t be found. 

It is all a matter of focus.  Objectives, for example, should be expressed in bullet points not several paragraphs of verbiage which make the eyes glaze over. 

I was told a great story by a brilliant Vistage speaker when discussing the Presidency of Ronald Reagan, he said that the President had gone into office with two objectives; to give America its pride back and to take out the Soviets. 

It took two terms and guess what, both of them happened. 

He had allocated specific tasks and duties to people in the administration and made sure that these tasks were delegated absolutely.  This did not imply a lack of interest or abdication of responsibility. 

Rather it implied complete trust in the people and the acceptance by then of total accountability for the success or failure of their activities. 

So what is different in a business?  Why should this method not be just as successful? 

Nine times out of ten it all comes down to a lack of focus.  All great leaders know precisely what they are going to achieve and the drive is absolutely towards that goal with no variations allowed. 

We have lost perhaps the greatest leader of the last few centuries in Nelson Mandela and it is worth examining that what he intended (not wanted, not wished for, not hoped for, but intended) to achieve was a true rainbow democracy with domination by neither black nor white. 

Nelson Mandela had focus, like all great leaders, and we can only hope that subsequent leadership of his country will carry that same torch in the future.  It would be the best way to honour the legacy of a great man. 

It is a wonderful metaphor for business.  Make sure that, if you are running a business, that for example the vision is lucidly expressed with complete clarity and in as short a sentence as possible. 

Transmit that vision constantly and consistently to everyone in the business so that they all know precisely where the business is going and what is expected of them. 

Cut through all the supporting but irrelevant “stuff” which gets in the way of clarity and tell the people how it is in as few words as you can muster.  It is not easy to chop words out of a statement but it must be done. 

Mark Twain said: 

 “I would have written you a shorter letter but I didn’t have the time”. 

Take time out to express yourself with clarity and focus and watch how positively the people will react.

 

 

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Do You Know Who Will Inherit the Business? Start the Process Today!

My posting on leadership last week brought out a great deal of positive comment for which many thanks.  In particular my good friend Harold Woodward emailed me with some trenchant comments about the whole aspect of organisation. 

From his own vast experience he said that businesses need to look to a much longer period in terms of forward planning.  So many businesses think that a one year “strategy” disguised as a budget is adequate and that on the basis of merely checking at the end of the year to see if they had achieved what they said they would.

A budget should be only a reflection of the true strategy of the business which should have been developed in a proper analytical manner and communicated to everyone so that they all know where the company is going or at least planning to go. 

My old friend and Vistage speaker, the late Brian Warnes, derided the whole budgeting process and described it as a “limp forecast of limp performance”.  He was probably right in many cases. 

He had different ideas about how best to put in sensible and meaningful financial controls and his solution was the use of break-even analysis, a simple and daily tool to monitor performance and to help the leader in short term decision making. 

However, one of the real issues in longer term planning for a business is that if succession planning. 

Just take a look at any business, successful or otherwise, and particularly at the age of the top team.  It is self evident that if the average age is over 55 then long term planning can be based more on hope than on realism. 

Another old friend, and I do mean old, used to say that as I was tending more and more to the mature, he certainly wouldn’t give me a long playing record for my birthday and even suggested that I shouldn’t buy green bananas. 

All very amusing but in some cases in business this is a serious problem.  We all like to think or at least hope that we are immortal but we are manifestly not so and if we are running a business then we need to understand that age does wither us and if the business is to continue and thrive it will need new leadership. 

This can be a very painful realisation for a leader.  Some resist the decision until the last possible moment, some agree but, for example, say that they will “take on a few projects just to help out” and a very few actually walk away into the sunset without a backwards glance. 

The fact is that succession planning can’t be done at the last minute and it should be a regular feature of all the business planning at all times. 

Remember that it isn’t only the leader who will age; every key department or section leader needs to have a succession plan in place so that there are no surprises and any succession will be comparatively seamless. 

What it means is that there needs to be a constant review of people in the business and by that I certainly don’t mean by annual appraisals.  Gaps in technology must be filled, skills must be polished and improved and above all the right people must be groomed for stardom. 

They will be the ones who will inherit the business perhaps not in the financial sense but certainly as the next generation of leaders. 

Don’t wait until it is too late.  Start the process right now.

 

 

Download my book "Leading to Success" from Amazon Kindle Store

Visit www.vistage.co.uk

Email ivan.goldberg@vistagechair.co.uk

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