Hiring great people isn’t enough. To get the best from them and improve your overall company performance, you need to manage them in the right way. The trouble is that most companies have unskilled managers. According to one survey by Gallup, only 1 in 10 people possess the inherent talent to manage. While over half (58%) of managers have received no management training.
Without strong management skills, your business is destined to struggle because your leaders become too focused on individuals and details, rather than step back to retain oversight of the bigger picture.
The best managers are those who are able to provide clarity about what’s needed and why, and then provide a safe environment for their people to get on in the best way they know-how. As the Chartered Institute of Professional Development highlights, management is a crucial role because it balances the level of challenge at work (which motivates and engages people) with the right levels of support (which reduces stress and supports their wellbeing).
Typically, people management is related to performance management in some way. But as Bjarte Bogsnes, chairman of Beyond Budgeting, shares with his ‘traffic light vs. roundabout’ metaphor, it’s important to select the right method…
Performance management with traffic lights
Let’s imagine a simple set-up without sensors. Here, the information is controlled by a set sequence, which could have been coded years ago – perhaps by someone who used data and information that is now out of date.
The traffic light system assumes that complex road junctions – ‘problems’ – need elaborate rules and structure to cross them. It also assumes that people are fundamentally untrustworthy and need instructions to know how to function properly. And it assumes that we must manage every possible scenario by dictating the associated action. It drives compliance. But disempowers people at the same time.
But didn’t you hire great people?
Research from Harvard Business Review shows that 60% of executives report regularly making bad decisions. Diversity leads to better decision-making, which is why involving your people will increase your chances of success.
This brings us to the alternative way to think about performance management:
Performance enablement with roundabouts
Rather than force people to take certain actions, what if you allowed them to decide based on real-time information?
In the UK we give way to vehicles from the right and go clockwise around a roundabout. We don’t accelerate onto it just because a light tells us to do so, rather we assess the situation:
- How fast are the cars moving on the roundabout?
- Do we need to hold back for emergency vehicles approaching the roundabout?
- Is the exit clear or are we likely to cause a jam by sitting on the roundabout?
The assumption has changed. Rather than believe people’s actions must be controlled, we trust them to do the right thing based on their skills, knowledge and experience. Yes, it’s the same ‘problem’ – how to cross a complex junction – but now the assumption is that people are generally trustworthy and, given a few simple guiding principles, will self-regulate and get on in the best way they know-how.
Just think about Spaghetti Junction, which serves 18 routes and manages 210,000 vehicles daily. Or Swindon’s Magic Roundabout, which comprises 5 mini-roundabouts so the inner circle moves anti-clockwise and allows a better throughput of traffic.
Bottom line: roundabouts are more effective, safer and cheaper. When the US state of Indiana adopted roundabouts it witnessed a significant impact: 90% reduction in fatalities, 76% fewer injuries, and a 50% increase in road capacity.
Do you manage or enable performance?
I think most managers would like to believe they use roundabouts to enable performance, but in reality we still see too many traffic lights holding up the business trying to manage performance. However, there’s a really simple test to check. Ask:
How easy is it to spend £1k in your business?
If you truly are an enabler, you would trust someone to spend that money – no questions asked. But if you’re forcing them to jump through hoops, getting approvals and justifying why the spend is necessary, you’re managing through traffic lights.
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