October 21, 2009

We’re heading into the final months of 2009, and while there are signs of economic optimism, many companies are struggling or just holding at a level plane. Performance reviews are on the horizon and there are a few essentials to keep in mind.

First, performance reviews ought to be held a lot more frequently than they are now. Especially these days when employees are nervous. They want, need and deserve to know where they stand, what they’re doing well and what areas need improvement. They also need to know that the company is interested in their growth. More on that in a minute.

Formal reviews are best held quarterly. Here both parties can review past performance against objective and measurements agreed upon at the previous review. I know, that advice is contrary to standard practice at many companies, especially those who insist on holding them only yearly. You know, the “bonus review” at the end of the year. That has to stop! These days companies and employees need frequent feedback to accurately track  performance.

I strongly suggest informal reviews be held between the quarterly reviews, so that every month every employee has contact with his/her manager or supervisor. This is a great time for those holding the reviews to offer praise and recognition, and ask about immediate concerns and questions so they don’t pile up and slow performance.

One final note: it’s essential to ask about and promote personal professional development as well as the employee’s contributions to the company. It’s easy in tough economic times to focus only on employee performance that directly impacts company goals and ignore their individual development. This is dangerous, as we know from many surveys that if employees do not feel valued and do not feel supported in their own career development, they will leave at the first opportunity. The job market may be tight now, but they will leave when they can. Build employee loyalty through effective reviews and talent management will take care of itself.

October 1, 2009

Under the category of “you can fool all of the people some of the time, some of the people all of the time, but not all the people all of the time,” I am amazed at the chutzpah shown by some businesses. No, I’m not talking about any of the big Wall Street scandals, just a small chain of retail computer stores here in Salt Lake City. A very, very successful chain, and one that fools some of the people, or at least enough of the people, some of the time.

This computer store sells laptops and desktops with a lifetime service warranty which initially sounds like a nice, value-added service. The owner does all his own TV and radio commercials looking and sounding slightly insane. Loud, crazy stuff. I think every city has someone like this. His tag line is always “(name of company)…where we love you!!!”

Every spot belittles other computer companies for trying to sell extended service warranties for what are lousy computers to begin with. The owner accuses other computers of being made with inferior parts and when you have a warranty issue they send your computer to “Chumba Wumba” for repairs. He really hammers on the immoral, over-priced extended warranties, since his machines come with a lifetime warranty included in the price. Are you suspecting anything yet?

This is where it we depart from reality. His laptop computers, last I checked, started at around $1800 for a real minimal machine, and up to three grand for a decent performer. Equivalent PCs from major manufacturers start at around $600 and prices keep dropping. If I buy say, a Dell or HP for $800 and buy an extended warranty for another $2-300, I’m still paying less than this guy’s machines with a “free” warranty. It’s so plain, isn’t it? Those “free lifetime service warranties” are built into the retail price, meaning they are not free at all. They cost the consumer a bundle. As for it being “lifetime,” most people trade up after a few years anyway because of new technology. And while the service may be free, those new parts can cost plenty, if they’re even available after three or four years. As a personal example, I bought an Acer laptop on sale for $600 two years ago. I did not buy an extended warranty and I’ve taken it in for repairs three times for total of about $250, plus a memory upgrade. I’ve still spent far less than the cheapest computer at these stores.

This is transparent fraud, but it’s out in the open for all to see. Yet a lot of people don’t and have made this owner a millionaire. I’m all for free enterprise and a proud capitalist, but there are ethical lines we need to maintain. Just because you can fool some of the people some the time does not mean you should. Others might say buyer beware, it’s clever advertising and there’s no law against that. Maybe not, but we shouldn’t need laws to tell us the right thing to do in business.