Tuesday, August 18, 2015

Developing Meaningful Performance Goals

An essential part of a successful performance review is developing meaningful performance goals for employees to achieve in the following year.  This positive approach to performance development cannot be applied universally, however.  Rather, one must tailor performance review goals to take into consideration the size of an organization, the variety of departments / specialties, the personality of the staff, and the organization’s culture. In this issue of Astronology, we provide helpful tips for how to develop performance goals that will be meaningful for your organization and, more importantly, your employees.

Know your System

As mentioned in a previous issue of Astronology, the most effective approach to the performance appraisal process is one that facilitates communication and professional growth.  One size does not fit all.  Rather, each organization’s performance review system must give consideration to the size of the organization, varying work specialties and departments, and the organization’s culture and staff.  The facilitator / supervisor of an employee’s performance review must be able to comprehend how the appraisal system works, and explain it clearly to each employee.  Through that process, the employee comprehends how he / she is being measured. Clear communication helps open the door for open assessment and a more productive review.

Be Prepared

Employees expect honest feedback on their work efforts. BEFORE the performance review, review the employee’s record of employment, which should include both achievements and moments of misjudgments.  Managers should reflect on their own interactions with the employees.  Select the areas to highlight for the employee based on his / her strengths and noticed weaknesses, and integrate into potential performance goals for the coming year.

Recognize that Goal Developing is an Interactive Process

Although the employee expects to receive feedback both positive and negative, he / she should never feel like the performance review is one-sided. Be prepared to hear where the employee thinks she has succeeded and perhaps fallen short. Ask the employee open ended questions to get his opinions if an employee may be hesitant to share his viewpoints. When establishing future goals, allow the employee to voice where he / she would like to improve and how he / she sees that improvement coming to fruition.  Managers must be willing to find areas where they can help employees become better.

Make Sure the Goals Align with Both the Organization and the Employee

Developing meaningful performance goals requires keeping in mind not only the employee’s work pace and personal goals, but also areas where the organization would like to grow within the next year.  Are there areas within the organization that management would like to see further explored or developed?  These organizational opportunities should be presented to the employee to determine interest in participating and associated developmental goals.

In addition, perhaps the employee sees other areas within the organization where he / she could provide value and insights during the upcoming year, for both organizational and personal growth and success.  If so, these areas are another opportunity for mutually beneficial performance goals.   

Make Sure to Schedule a Follow-Up

Depending on the type of goals that are set, and the organization’s frequency for performance reviews, follow-ups need to be scheduled throughout the relevant time period.  Managers must ensure they schedule follow-ups when establishing new performance goals, so that employees stay on track, unanticipated resources can be allocated, and goals can be adjusted in light of previously unknown information.  During the following quarter, the manager and the employee might see that goals need to be adjusted.  Be flexible for success!

Developing performance goals can be an enjoyable experience for both the employee and the supervisor / reviewer.  To make the most of the process, ensure that open communication permeates all discussions, and be prepared to offer insightful highlights, constructive criticism, and actionable suggestions.  Through this process, both individual managers and the organization at large will surely watch the employees & the organization grow and enjoy mutually beneficial success.

Tuesday, August 04, 2015

Can We Pay a Living Wage?

Although at the end of 2015 New York State’s minimum wage is scheduled to increase to $9.00 per hour, the recent New York State “fast food” minimum wage has been approved to increase to $9.75 per hour, and eventually reach $15.00 per hour.  If you do not work in the restaurant industry, or in New York State, you may think this recent change doesn’t affect you. However, as of late, many industries are concerned that this change in the restaurant industry may have a quick domino effect on other industries. Astron Solutions discusses the challenges this new change presents other industries and the overall economy today.

A recent New York Times online article expressed that this recent decision to raise the minimum wage for fast food workers to $9.75 per hour “thrust(s) New York State to the forefront of the current experiment.” The article goes on to state that “based on projections from government data, the proposed $15 minimum wage for fast-food workers could represent more than 60% of the wage of a typical New York City worker when it takes effect at the end of 2018...” The New York Times online article highlights the 2003 minimum wage increase of Santé Fe, New Mexico, to compare and predict New York’s possible future. Despite a concentrated analysis with current modern tools, economic analyses of the Santé Fe increase suggest it had little effect on employment.

Astron Solutions’ Michael Maciekowich notes that the impending changes have caused quite a stir. According to Mike, “numerous Astron clients in New York State have called, concerned that the ‘fast food’ minimum wage will in essence become the new state minimum wage, in that these organization compete for entry level staff with the fast food industry. As the ‘fast food’ minimum wage increases to $15.00 over the next four to six years, organizations that compete for staff with this industry will have no choice but to raise their minimum wages to compete.  This will also have a domino effect, in that this increase in the entry wage will create pay compression with coordinators and supervisors in the same work units.  This compression will add unforeseen additional budgetary impact.  For non-profit organizations, this will just add to concerns of how to address increasing pay expenses to already shrinking revenue dollars."

A Forbes online article highlights a portion of New York Governor Andrew Cuomo’s announcement speech about the minimum wage change: “The taxpayers of this nation have been subsidizing the workers at McDonald’s and Burger King at a cost of over $7 billion annually and that’s just wrong.” Forbes expresses how welfare payments are not by and large subsidies to employers.  Through a quote from Arindrajit Dube, a scholar in support of minimum wage hikes, the Forbes article reminds us that for employers to truly have public subsidies, their wages would have to be lower. “Depending on where one is on the EITC (Earned Income Tax Credit) schedule, that policy can increase work incentives.” Analysis from UC Berkeley’s Jesse Rothstein alludes that for every $1 EITC workers use, post-tax income rises by only $0.73. Also of note is that these primarily affected businesses are franchises, not major corporations. The money projected that restaurants such as McDonald’s and Burger King collect annually does not reflect how much a franchisee will actually earn.  According to Forbes, franchises are more similar to a “Mom and Pop store” than a giant corporation.

Concern for this change is coming from all angles. Franchisees are wondering if they can really afford the increases.  Organizations outside of the fast food industry are concerned they may lose some workers to fast food positions that pay more. What can be done?

A Fast Company online article examines the popular fast food chain Chipotle, and how they could address the living wage issue. Chris Arnold, a Chipotle spokesman, mentioned in an e-mail to Fast Company that “we have never taken a position on the minimum wage and believe that a minimum wage or starting wage tells only part of the story; We already pay above minimum wage and over benefits that are more than competitive.” Some of those benefits include paid sick & vacation days and tuition reimbursement. The Fast Company Online article explains that even if the company had the CEOs’ paychecks reduced to $1 per year and divided the compensation among the current employees, it would result in only a $0.55 increase per hour for an employee working 40 hours per week. So what could they do? In San Francisco, this year the minimum wage increased to $12.25, and will increase to $15 by 2018. Coincidently, it has been noted that Chipotle raised its menu prices in the city by 10%. Such a move sends the message that customers have to share in the responsibility of lifting minimum wages. In short, if you can afford an $11 burrito, then you can probably pay for the same burrito with the cost increased by $1. Time will tell if this will work.

Could you adopt this approach if you own a franchise? Could you adopt this approach if your industry becomes affected by the fast food wage changes? Have you prepared other solutions? Write to Astronology. We’d love to hear your input!

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