General Business Coaching and Consulting articles that cover how to save time, make money and increase your business efficiency.

Performance Reviews – Are They A Thing Of The Past? – Part 2

The majority of performance-management systems do not work, as they are rooted in models for specializing and continually optimizing discreet work tasks.
Performance-management systems have evolved, however they have not fundamentally changed. A measure of the number of pins produced in a day could become a more sophisticated one, such as a balanced scorecard of key performance indicators (KPIs), which link back to over-arching company goals.
What began as a simple mechanistic principle acquired layers of complexity over decades, as companies tried to adapt industrial-era performance systems, to ever-larger organizations and more complicated work.
What was measured and weighted became increasingly more micro. Many companies struggle to monitor and measure a proliferation of individual employee KPIs – a development which created two kinds of challenges. Firstly, collecting accurate data for 15 – 20 individual indicators can be cumbersome, often generating inaccurate information. (In fact, many organisations ask employees to report these data themselves.) Secondly, a proliferation of indicators, often weighted by impact, produces immaterial KPIs and dilutes the focus of employees. KPIs are regularly encountered which account for less than 5 percent of an overall performance rating.
Nevertheless, Managers attempt to rate employees as well as they can. The ratings are then calibrated against one another and, if necessary, adjusted by distribution guidelines which are typically bell curves. These guidelines assume the vast majority of employees cluster around the mean and meet expectations, whilst smaller numbers over and under-perform. This model typically manifests itself in three, five or seven-point rating scales, which are sometimes numbered and labelled: for instance, “meets expectations,” “exceeds expectations” or “far exceeds expectations.” This logic appeals intuitively (“aren’t the majority of people average by definition?”) and helps companies to distribute their remuneration (“most people get average salaries; over-performers get more, under-performers get less”).
Bell curves however, may not accurately reflect the reality. Research suggests that talent-performance profiles in many areas, such as business, sports, the arts and academe, look more like power-law distributions. Sometimes referred to as Pareto curves, these patterns resemble a hockey stick on a graph. In 2012, a study concluded that the top 5 percent of workers in most companies out-perform average ones by 400 percent.The sample curve emerging from this research would suggest that at most, 10 to 20 percent of employees make an out-size contribution.
Google has said that in part, this research lies behind much of its talent practices, as well as its decision to pay out-size rewards, in order to retain its top performers: remuneration for two employees doing the same work can vary by as much as 500 percent. Google wants to keep its top employees from defecting and believes remuneration can be a “lock-in”; star performers at junior levels in the company can make more than average ones at senior levels. Identifying and nurturing truly distinctive people is a key priority, given their disproportionate impact.
Companies weighing the risks and rewards of paying unevenly in this way should bear in mind the bigger news about power-law distributions: what they mean for the great majority of employees. For those who meet expectations but are not exceptional, attempts to determine who is a bit better or worse yield meaningless information for Managers and do little to improve performance. Getting rid of ratings which demotivate and irritate employees makes sense.
Adobe breaks projects down into ‘sprints’, which are immediately followed by de-briefing sessions. They emphasize principles of collaboration, self organisation, self direction and regular reflection on how to work more effectively. Regular check-ins to assess these principles replace annual appraisals. PWC moved to a scoreless review system, however after negative response by employees, particularly those focused on a Partner track, they re-instituted rankings in their client services practices. Employees do not still receive a single rating every year, they now receive scores on 5 competencies, as well as other development feedback.
The point is that such companies now think that it is a fool’s errand to identify and quantify shades of differential performance among the majority of employees, who do a good job but are not among the few stars. Identifying obvious over-performers and under-performers is important, however conducting annual ratings rituals based on the bell curve, will not develop the workforce overall. Instead, by getting rid of bureaucratic annual-review processes, as well as the behaviors related to them, enables companies to focus on getting much higher levels of performance out of many more employees.
If you would like learn more about how you can create a powerful change in the performance review that will have an impact on recruiting, job matching and employee retention, call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.

Performance Reviews – Are They A Thing Of The Past? – Part 1

Over the next few BLOGS, I’m going to share some interesting ideas about employers, employees and the impact of performance reviews.  Like everything else in business, this process has been changing and there are some great ideas for how we can improve communication between company leadership and the people on our teams.  Some ideas of how this can, and should be done, are shared below and in future publications.

Connect with your team!

Performance reviews are a thing of the past in companies like IBM, Oppenheimer Funds and General Electric. They cite compelling reasons: Widespread evidence shows traditional reviews do not work: They focus on an individual’s previous behavior, rather than helping them to improve in the future; There is an assumption that poor performers will never change.

If companies are concerned about developing and retaining talent, whilst holding employees accountable and helping them to set and reach performance benchmarks, there are alternatives to the traditional annual review.
There are a number of actions:
  1. Determine whether traditional Performance Reviews are achieving company goals. Do they provide accurate assessments of performance? Do they help employees improve and develop? Do the rewards which relate to superior reviews assist in developing and retaining talent?
  2.  Consider an increasingly informal review system. This will involve more regular interaction with employees and should include ways to quickly identify poor performers, so they can be monitored and coached. These reviews can include numerical rankings and assign employees with several numbers four times a year, to provide rolling feedback on different dimensions.
  3. Get support from senior management and re-inforcement from the organisational culture. Before rolling out any new review system, there has to be a clear, consistent message about its validity, particularly from HR.
These issues are not new. They have become increasingly transparent, as roles evolved over the last 15 years. More and more roles need employees with deeper expertise, more independent judgment and better problem-solving skills. Employees shoulder greater responsibilities in their interactions with customers and business partners, as well as pressure to create value in ways which industrial-era, performance-management systems would struggle to identify.
Around the world, nine out of ten companies continue to generate performance scores for employees. Importantly, they also use these as the only basis for salary decisions. The issue which prevents Managers’ dissatisfaction with the process is uncertainty, in terms of how a revamped performance review system ought to look.
Answers are emerging. Netflix no longer measures its employees against annual objectives, because their objectives rapidly change. Google has transformed the way it remunerates high performers at every level.
These changes are new, varied and experimental and patterns are emerging:
  • Companies are re-thinking what constitutes employee performance, by focusing specifically on individuals who are a step function away from average – at either the high or low end of performance – rather than trying to differentiate amongst the majority of employees in the middle.
  • Companies are also collecting more objective performance data, through systems which automate real-time analyses.
  • Performance data is used increasingly less as an instrument for setting remuneration levels. Some companies are now severing the link between evaluation and compensation, at least for the majority of the workforce, whilst linking them more comprehensively at the high and low ends of performance.
  • Better data supports a shift in emphasis from backward-looking evaluations to fact-based performance and development discussions, which are becoming frequent and on an as-necessary basis, rather than annual events.
 How these emerging patterns develop will vary from company to company. The pace of change will also differ. Some companies will use multiple approaches to performance management, holding on to hard-wired targets for sales teams, whilst moving other functions or business units to new approaches.
If you would like learn more about how you can create a powerful change in the performance review that will have an impact on recruiting, job matching and employee retention, call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.

The Value That A Business Coach Can Bring To You.

Some People Have a Therapist.

I Have a Business Coach.

Business coaching Tastatur FingerSo, while many people hire therapists, I have the business equivalent: a business coach.
I have been working with my coach, Michael, for close to five years. We “meet” via phone for an hour, usually every week. He has helped me to not only transition myself from investment banker to a media and entrepreneurial hybrid, but he is a constant source of support, ideas and accountability.
While coaches can vary in price — from $100 to several hundred dollars or more per session — price shouldn’t be the deciding factor. You want to find a coach who understands you and your business and that you are comfortable with, but also one that will push back on you, too. Hiring a “yes man” (or woman) won’t produce a good return for your investment.
Getting recommendations can be a good place to start on your search for a coach. Also do some research online and then try out a few in a complimentary or low-cost initial session (which most coaches offer) to get a feel with whom you think would be the best fit for your needs.
Here’s why I think that this type of business therapy is helpful and how you and your business can benefit from it.

I pay to only talk about me and my business

  • I’m an advisor — it’s the role I play in life.  Personally and professionally, I give advice to solve other people’s problems.
  • This means that most of the time, I am not focused on, or talking about, my development.
  • By paying a business coach, I get, for a full-hour at a time, to talk about and focus on nothing other than me, my problems, my opportunities, my goals and did I mention me? It forces me to schedule time to work on my own business, time that I would likely have spent helping someone else.
  • This discipline has been invaluable in morphing my professional life and growing my business endeavors.

Additional business knowledge

While I do have many friends who would oblige listening to me if I asked, many don’t understand business. So, their help isn’t so helpful in problem solving. Having a savvy business person in my corner gives needed perspective, such as seeing the forest through the trees, so to speak, from someone whose input is relevant.

Consistency and history

Having a history of working together allows my coach to see patterns or to reference things and opportunities that I have mentioned in the past that I may have overlooked or even forgotten, but that could be helpful in the present and the future.


Because my coach is a paid advisor and not a friend, he will call me out on the few occasions where I need to be called out. Friends, family and even colleagues are often hesitant to do this because they have a multi-faceted relationship with me and want to keep up the “warm fuzzies” in our interactions. The coaching relationship is aligned around helping me to succeed, which gives my coach more freedom to be honest and helpful.
On the other side of the coin, I am also brutally honest with my coach, because I know that there is no judgment. I don’t have to worry about hurting someone else’s feelings or being vulnerable. Not that I am one to really be anything other than brutally honest, but I still feel like I have more liberty to deep-dive into the nitty-gritty of my moods, challenges, etc. because I know that he will help me to work through those, without having to worry about it making family dinner awkward.
So, whether you are seeking discipline, a forum to vent or even a sanity check without judgment, I recommend that you invest in a business coach to help your business get to the next level.
If you would like learn more about how having a business coach can add value to your life and your business,  call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.

EXIT – Are you planning to get out of your small business?

All Business Owners Have PAIN’s.

If you’re scaling your business, you will recognize these PAINS

exitFor the past 27+ years I have worked for, with or coached business owners / leaders. I recognize that each and every business is different and unique.  The clients I have served range from the single real estate agent to the Executives of a 2000 FTE  manufacturing firm.  Often, our efforts surround finding ways to increase efficiencies, reduce time investment on projects or provide new and timely information have been the focused solutions.   This is apparent that they have PAINs that they would like to have eliminated from their lives.
This pain is most common for business owners that are in their 50’s+, have been working IN the business for years and, very often, will have feelings of being tired, or burnt out, and may have lost much of the energy and passion that was part of the early years of growing their business.  They are seeing the potential of retirement, but have just realized that their biggest asset is their business.
You will hear them say things like…
  • How much is my business worth?
    • Your business is worth exactly how much someone is willing to pay for the business.  The estimated sale price of the same business will vary greatly depending on their role… accountant, business broker, family member looking to run the business, key employee wanting to buy it, or a financial or strategic buyer from outside your company.
  • Who would be interested in buying my business? and how will I make that happen?
    • First – you need to start thinking about / looking for potential buyers years before you expect to sell / retire.  The path to transfer a business (for the value that you expect) is long, often unclear, and filled with barriers and pot-holes.
    • Second – look to the ‘low-hanging fruit’… family member who is working in the business, key employee that has been engage and loyal, or your competitors.  When you’ve exhausted all of these, then a business broker may be another option
    • The ‘HOW’ for any of the above is to gather an EXIT team of professionals together to help you develop and implement a plan… Business professionals could  attorney, bankers, accountant, coach, financial advisor, insurance, and tax advisor. All these can play a significant role and be of great assistance in different part of your ‘trip’
  • I’d like to retire, but who will run the business if I’m not here?
    • Selling the business outright is not always the best option.  It may make more sense to hire someone to run the business and have it provide an income stream to you and your family.  Each case is different and so will be the solution.
  • How do I convert the business I’ve built into cash for my retirement?
    • First – you need to know how much you will need when you are away from the business.  A good financial advisor will be able to help you put together a good estimate.
    • Second – now that you know what you’ll need, you need to evaluate what you have in liquid and retirement assets and an estimated value of the business.  For safety sake, I would suggest that you plan for the lower number on the price range of the business.   There are a variety of industry specific formulas to determine value, but if you take that EBITDA average over the last 3 years.  Multiply that number by .5 and 5.  The end result of the value of your business will (likely) be within that range
    • Having the buyer write you a check is the easiest and cleanest – but it doesnt often happen.  Talk to your EXIT team – they can help you develop a realistic plan
  • Making sure that we have a proven system for generating qualified leads will increase the value of my company… now I just need to figure out how to do that.
    • The value of your business will depend on its ability to consistently grow and scale.  Being able to create a steady stream of new business will ad great value to the business and significantly increase the amount someone will be wiling to pay.
As we mentioned before, the way to achieve your goal of Exiting your business is a ‘long and winding road’, but the following 6 steps can provide you an outline to follow…
  1. START NOW – Exit planning can be complicated and take time. Assemble  your EXIT team now.  Plan for 5-10 years and you may have enough time.
  2. CLARIFY YOUR GOALS – Share your dreams with your EXIT planning team.
  3. BUILD YOUR PLAN –Work with people that know the process. There is much to consider.
  4. MANAGE YOUR RISK – A strong plan should account for all the things that could derail the plan.  Protect yourself, your family and your business.
  5. VALUE YOUR BUSINESS – Find the right valuation formula for you.  Your EXIT planning team can help
  6. REVIEW YOUR PLAN – The only constant is change.  Review your plan yearly to identify any changes
If you would like learn more about how you can develop your plan to Exit your business,  call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.

MONEY – Often, the business owner’s biggest PAIN

All Business Owners Have PAIN’s.

If you’re scaling your business, you will recognize these PAINS

For the past 27+ years I have worked for, with or coached business owners / leaders. I recognize that each and every business is different and unique.  The clients I have served range from the single real estate agent to the Executives of a 2000 FTE  manufacturing firm.  Often, our efforts surround finding ways to increase efficiency, reduce time investment on projects or provide new and timely information have been the focused solutions.   This is apparent that they have PAINs that they would like to have eliminated from their lives.
From the outsider, MONEY is often seen as the prime benefit of owning your own business.  But in business, MONEY can take many forms and looked at in many ways.  Here are a few of the most common MONEY issues…
  •  Need More Sales or Revenue:  This usually involves getting more customers or selling more to existing customers
  •  There is never enough money in the checking account at the end of the month
  •  Controlling Costs:  Realizing that you’re selling more but you dont have your fixed and variable costs under control, so there is often no money left in the account at the end of the month
  •  Marketing and Advertising in todays marketplace is constantly changing.  We don’t seem to be getting a ROI on our investment.
  •  Money For Growth:  If the business is growing, you’ll need to scale the way you’re doing things.  That will probably require new staff, more equipment, more inventory, additional space, etc.  All those thing require MONEY – often up well before you’re able to see the results of your growth curve
    • I have opportunities to grow the business, but need money to invest and cant get it from the bank.
  • Un-Anticipated Expenses:  If your business has been growing, one of the challenges for the business owner, is that WHEN the business begins to make profit, the owner(s) need to plan for Taxes, Business Reinvestment and Retained Earnings accounts.
    • By the time I pay all the bills and my employees, there is nothing left for me.
  • Your CASH-GAP?   Every business has one.  Thats the time between your investment in raw inventory, additional staffing or production time and the time that your customers decide to pay you.  Lack of Cash is one of the biggest challenges for business owners – even when they’re profitable.
    • Although we’re busier than we’ve ever been, the check book doesn’t show it
Make sure you have a good accountant that can get your business financial reports in a timely manner.  Making sure your monthly and year-end Profit & Loss and Balance Sheet are complete and accurate is the first step to making good fiscal decisions.  If you can’t trust the numbers, you will make bad decisions.
Key Performance Indicators (KPI’s) are gathered and reported weekly.  These are specific number that will measure the activities of different parts of your business.  The KPI’s will differ for each business and will change over time, but you should measure the things that will help you increase sales, reduce costs, increase efficiency, or track customer satisfaction.  These numbers will be used as a ‘ check & balance ‘ to make sure the monthly numbers are accurate.  And, because these number are tracked weekly, you’ll have more visibility to things that impact your business- both good and bad.  Ask the question…”What happened? Se we can do it again, or never do it again.
Here are some tools to use to improve MONEY in your business…
  • Get paid faster.  KPI = number of days to get customers to pay
  • Error Rate:  How many things do you make that need to be fixed or corrected.  KPI’s = Error% or Error Value
  • Marketing Metrics:  KPI’s = Cost / Lead, Cost / Sale
  • Customers:  KPI’s = Profit / Customer, Life Time Value of Customer, number of Transactions per customer
  • Get better terms from vendor/suppliers:  KPI = number days dating
  • Business and Personal Credit Rating:  KPI = Personal and Business credit scores
If you would like learn more about how you can increase the amount of MONEY in your business,  call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.