In my view, the employee performance review system has a number of shortcomings. For one, postponing communication of feedback to an arbitrary date in the future; feedback needs to be timely in order to be helpful. Another is the emphasis on grading past performance rather than shaping future efforts.

We can, however, mitigate these two weaknesses. Reviews may be performed on a quarterly or monthly basis, rather than once-a-year. Achievement may be emphasized at the expense of past performance by incorporating employee-specific goals into the review, and communicating specific expectations to the employee at the beginning of each performance review period.

If goals and expectations are sufficiently detailed and quantified, responsibility for evaluation may be shifted from the manager to the employee (performance reviews are worthwhile only if the benefits realized exceed the cost—in time and resources—of performing them). Think of an airline schedule; at the start of the work day, specific flight departure times represent agreed upon expectations for all employees. When the day is finished, performance is evaluated with, of course, the actual departure time for each flight.

Now, one of the big advantages of utilizing this type of “before and after” performance review system is that the employee compiles the information over time, so very little management time is required. But the really cool thing about this system is that, when executed as outlined above, there is really no difference between a performance review and a bonus plan.

The purpose of both performance review and bonus plan systems is to: 1) compel staff to plan in advance the programs, projects, and major efforts to be carried out in the coming twelve months, break each into manageable pieces, and assign individual responsibility for execution; 2) keep employees focused on established priorities; and, 3) provide a basis for assessing, at the end of each evaluation period, how well each employee (and the entire organization) performed.

Success depends, in large part, on: 1) how well designed the system is; and, 2) how committed the employee is to the system, including how often he or she compares individual expectations to actual outcomes. The first–design of the system–tends to impact both performance review and bonus systems more or less equally. The second, however–employee commitment–can be significantly increased by using a bonus system. Moreover, bonus opportunities maintain employee commitment to the system over time.

How does one establish a method to measure individual performance? It’s not as difficult as it might seem, even in a nonprofit.

Consider that work activities are often either “input” based, or “output” based. An input is what an employee does, for example: make a phone call to a donor; write an op-ed; or, research educational performance for a state education system. An output (or outcome) is something that occurs as the result of an input: receive donor money; generate attendance at an event; or, visits to a website.

Employees may be evaluated on inputs or outputs, but the best approach is to utilize a combination of both. The variety of actions and outcomes which may be selected for performance evaluation may at first appear daunting, but there exists an established methodology for the process. Corporations have faced this same issue for years and now use what’s called a “balanced scorecard”.

Here’s a simplified example of a balanced scorecard which may be used for a development associate:

Here is a more complex example of a balanced scorecard developed for an employee bonus plan (in .pdf format). Here is the same example as an Excel spreadsheet.

Here are two articles which explain in greater depth how balanced scorecard bonus plans may be utilized by nonprofit organizations. If you have difficulty finding a copy, contact me.

• “‘If the Shoe Fits’: Not-for-Profits Try Out New Compensation Plans” by Sally B. Bailey and Howard Risher, from Compensation and Benefits Review: v28 p47-57 My/Je 1996, © American Management Association, New York. All rights reserved. WBN: 9612203772007
• “Linking CEO Compensation to Organizational Performance” by David E. Strachan, and Lawrence G. Myslewski; Association Management v49 p63-4+ Ap 1997.

Michael G Smith

t is important to understand the mindset of the individual who will review your resume. Employers do not read resumes for the sake of those seeking a job, but because they need to hire an individual with certain skills. Obvious point, yet many job seekers mistakenly believe employers carefully read each resume and cover letter. In reality, the employer tasked with reviewing resumes is pressed for time and must race through, quickly setting aside those that are lengthy, unconventional, lack dates of employment, not an obvious fit, or simply difficult to comprehend.

1. The ideal resume makes it easy for the employer to evaluate the job seeker’s level of experience and range of skills.

2. Unless you have a very specific objective, leave it off your resume. If your objective doesn’t match the position being filled, the employer may use that fact to disqualify you for an interview.

3. A resume is a marketing piece. Your achievements, awards, and accomplishments will distinguish you from other, similarly qualified candidates, so make certain they are listed on your resume.

Employers are desensitized to vague assertions of achievement, so claims must be specific and quantified. Statements such as “Managed the creation of a successful major gifts program” are so common as to be meaningless, but a more detailed description will get attention: “Solely responsible for establishing and overseeing a new, major gifts program, which subsequently raised nearly $400,000 within two years, exceeding the second year goal by 10%.” (More on this here.)

4. Put your cell phone number (or work number) on your resume. Interviewers will call during the day and you should make it as easy as possible for them to reach you immediately and directly, or risk missing out on an interview opportunity.

5. Put your email address on the resume.

6. Contrary to what is often taught in school, the preferred resume format is historical rather than functional. The decision maker wants to see, in chronological order and in context, the progression of positions and responsibilities you’ve had over the years.

7. You must include the years of employment for each position.

8. Older workers sometimes leave early work experience off their resume in an effort to disguise their age. However, employers do not prefer younger workers to older ones; they prefer workers who are best qualified for the position. Older workers have more experience, maturity, and insight–qualities which are essential for many positions. In fact, age and experience provide older employees with a competitive advantage over younger workers; it is the one qualification that a younger candidate cannot offer. (More on this here.)

9. Proofread your resume and then have someone else proofread it for you. You don’t want typos, mispellings or unclear statements to hurt your chances for an interview.

10. Depending on your years in the workforce, a one or two page resume is sufficient. The longer your resume, the less likely it is to be read. Start your resume by putting down the required information (dates, employer, title) and then add the information you are most interested in having a decision maker read. Everything you add after this point will dilute the resume, so add judiciously.

11. Stylistically, your resume should be simple and straightforward. Attempts to make the resume fancy or eye-catching just detract from your qualifications.

12. If your resume runs more than one page, do not put page numbers within the body of the resume since the actual page breaks will vary depending on the software and display mode on the viewer’s computer. The proper way to insert page numbers is in the header or footer.

13. Resumes today are typically emailed to an employer and emailed from one person to another within a company. Don’t bother faxing or mailing.

14. Cover letters should be kept short and to the point, as they are often not read, especially if lengthy.

Resume example

Michael G Smith

Experience

And so it is in staffing, where the only valid and accessible indicator of future success in a given job is past performance in the same or similar job. If an individual has experience at successfully performing “X,” then there is every reason to believe that they will be able to do “X” in the future. Candidates lacking this experience are far less likely to succeed and will require an extended period of on-the-job learning before they are capable of functioning quickly, consistently, and with few mistakes. Rule number one: individuals who have previously performed a given job successfully are qualified candidates for that same job in your organization.

This rule, however, must be further refined to take into account the depth of experience a candidate may possess. There is a significant difference in capability between an individual who has performed in a position for two years and another with fifteen, or twenty years of experience. There are often significant differences in the extent of experience even when candidates have the same title–one may oversee a department of a few employees, while the other may oversee multiple departments, managers and reports. Rule number two: an individual’s previous responsibilities should reasonably match those of the position to be filled, in both extent and degree..

Developing a Job Description

This raises an important question: “What is the level of capability required in a job?” Too often, the specifications for an employee seem to materialize out of thin air, with much attention given to the responsibilities and experience required, but little focus on overall workforce planning. Viewed in a broader context, the employees of an organization are the “machines” that get the work done, which is why employees are accurately referred to as “human capital.” In a manufacturing environment, the processing that must be performed defines the context of equipment use and purchasing decisions, as there are a variety of machines available to perform any process. For example, one could employ a small number of large, multi-function machines, or a larger number of small, dedicated machines, with numerous advantages and disadvantages to each option. The lesson here is that: 1) decision-making should focus on multiple, interrelated processes, not discrete machines; 2) a given process may be accomplished using different combinations of machines with differing capabilities. Staffing decisions should be approached in a similar way.

Workforce planning is best accomplished by identifying the processes to be performed and then determining the possible combinations of existing and obtainable labor power that can perform these processes. Each viable option is evaluated and compared in an effort to identify the most advantageous option. Inherent in the elaboration of a viable option is a description of a specific function or activity to be performed by each employee. This description defines the capability required of the employee–he or she must be capable of performing the activity described. Rule number three: the work to be accomplished requires discrete activities to be performed and these activities define the capabilities required of each employee.

Once the planning has been done and the qualifications required of the future employee are known, how does one go about finding viable candidates? It is a common complaint of hiring managers that qualified candidates are difficult to find. Yet, it is not really a candidate problem so much as a budget problem. With unlimited funds, a massive marketing campaign would surely generate more viable candidates than could be interviewed. What most for-profit companies have long known is that it costs money to generate a sufficient number of viable candidates and it costs even more money to fail to do so. Recruiting costs are simply budgeted, along with training and interviewing costs, as part of the outlay required to hire an employee. Although accurate figures are elusive, at least 50% of all positions are filled using advertising, with executive recruiters contributing about 35% of all employees. However, when one considers only salaried positions, the percentage filled by executive search firms is much higher than for advertising and the vast majority of all middle and senior level managerial positions (excluding those filled by promotion) are filled by search firms. Rule number four: executive search firms are the most cost-effective source of qualified candidates for salaried positions.

Maintaining focus during the interview

When the resume of a viable candidate is received, an interview should be promptly scheduled. An interview serves three purposes: 1) determine if the candidate has previously performed the same or similar work as required by the position they are being considered for; 2) evaluate the personality and veracity of the candidate; and 3) “sell” the candidate on working for your organization. One potential interview pitfall is a failure to stay sufficiently focused on the candidate’s work history. It is easy for a candidate to make sweeping assertions about their abilities and quite another to make statements of fact about what they have done at work over the past few years. The most desirable candidates are honest about their experience and comfortable with self-disclosure, but a clever and genial candidate may project an appearance of extensive experience, while avoiding discussion of specifics. Rule number five: candidates should be judged on their qualifications, not on their interviewing skills.

One of the major mistakes an employer can make is dragging the interviewing process out so long that all the good candidates get away. Anyone who has shopped for and purchased a home knows that the dogs stay on the market for months while the desirable houses are snapped up very quickly. Hiring managers should strive to come to a decision on a viable candidate within two weeks or less. If more than one interview is required, the second interview should be the last interview and all the decision makers must make themselves available to meet the candidate at that time. With each passing day, the likelihood increases that a candidate will receive and accept an offer from another employer, get a raise or promotion, or experience a change in personal circumstances that alters their employment search. Furthermore, a candidate’s enthusiasm about an opportunity cools with the passage of time and eventually transforms into disdain for an organization that is unable to make a timely commitment. Rule number six: desirable candidates will be lost if timely decisions are not made.

The Background and Reference Check

The most important step in the hiring process is reference checking. A thorough reference check must confirm the quantity and quality of a candidate’s previous experience and uncover any problems or concerns that the candidate may not have shared. Dates of employment must be verified as well as specific qualifications essential to success in the position.

An online search should also be conducted with an eye toward discovering employment omitted from the resume, or other problematic issues, such as litigation or inappropriate public behavior (including online postings). Rule number seven: some people will say anything to get a job, so information provided by candidates must be verified and not accepted at face value.

Although mutual fund prospectuses warn, “Past performance does not guarantee future results,” when hiring, past performance is our best predictor of future performance. A thorough assessment of previous experience (through resumes, interviews, and reference checks) provides the information required to hire employees with the greatest likelihood of success.

Michael G Smith

(I should point out that “cover letter” in this context means, typically, a cover message, as in an email message that accompanies your attached resume or application, since nearly all resumes are forwarded by email these days.)

The most efficient way to screen resumes is, well, to screen the resume and not bother with the cover letter. A quick review of a resume is all that’s required to place it in one of three categories: not qualified (the vast majority of all resumes); possibly qualified; and, almost certainly qualified. If the resume screener has enough candidate resumes in the “almost certainly qualified” category, the resumes in the other two categories are set aside (with the cover letter never having seen the light of day).

If the number of potentially qualified candidates must be reduced, the resume screener will take a more detailed look at the resume and possibly read the cover letter. It’s at this point the tactic of packing lots of info into the cover letter may backfire: information in the cover letter might be used to reject the candidate. Remember, the resume has survived the first cut and is now sitting in the “to be interviewed” pile, so the ideal letter for this situation says simply, “Please consider me for the position you recently advertised”, as it avoids providing the screener with any information that may be used to reject the candidate.

Rest assured that if the cover letter is long-winded, contains stupid comments (“out-of-the-box thinker”; “I’m a people person”), contains some otherwise benign detail that is viewed negatively, or any one of a thousand other problems that the job seeker may not anticipate, the resume will move out of the “interview” pile and into the “not now, maybe later” pile.

Since one cannot know with certainty how the person reading the cover letter will react to any particular bit of information, it is best to let your resume carry the full load of securing an interview. Don’t risk providing a reason in your cover letter to undo what your resume may have already accomplished.

Michael G Smith

The individual who reads your resume is interested in learning highlights of your successes, not routine activities; the more specific the information, the better. Quantify information wherever possible: “ranked number 2 out of 10 sales reps” instead of “a top-ranked rep”, or “increased donor revenue from $525,000 to $740,000 in two years” instead of “dramatically increased revenue”.

Employers read resumes to determine whether to interview or reject a candidate. To make this decision they need basic information on experience and qualifications. Beyond basics, they need to know how well you performed in the position.

List the successes for which you can take full, or at least primary, credit; don’t list trivial items as that gives the appearance you contributed nothing of substance. Obviously, any performance-based award received from your employer should be noted.

Managers face a greater challenge with resume writing, as accomplishments often involve the efforts of many subordinates and the causal chain may not be obvious. For example, an increase in sales achieved by a division may be directly attributable to the efforts of the division’s sales manager, but the cause and effect relationship must be spelled out on the resume or it may appear that the manager was simply in the right place at the right time. A secondary benefit of elaborating on one’s role in effecting change is that the hiring manager views the process underlying the success, instead of just the before and after.

Michael G Smith

The Earth’s proximity to the Sun is essentially a “good news, bad news” situation; the good news is that our Sun provides light, heat and energy. The bad news is that the Sun will exhaust its hydrogen fuel within the next 5 billion years or so, causing it to grow to 250 times its current size and increase in brightness a thousand times over.

It goes without saying that the Sun’s personality change will render much of our technology obsolete, including sunscreen–regardless of spf rating. The Sun’s life change will produce hot flashes capable of melting any planet foolish enough to loiter closer than the orbit of Mars.

Unless we forestall the Sun’s transformation into a galactic bonfire, the Earth is destined to become an orbital version of a flaming marshmallow, slipping from its axis to be immolated by a morbidly obese Sun. It’s obvious, therefore, that efforts to “save the Earth” or “save the planet” are preempted by nature and our energies will be better spent figuring out how to migrate to a more youthful solar system.

Michael G Smith

Try this thought experiment: assume you are in the mood for a steak dinner and have two restaurants from which to choose. The only information available is a single photo supplied by each establishment. Looking at the pictures here, which restaurant, A or B, are you most likely to select?

Now consider the tens-of-thousands of job openings posted at any given time. Will you attract a greater number of desirable candidates if your job listing is detailed, feature-rich and describes the position in attractive terms (choice A), or states only basic information (choice B)?

The most common and serious problem: posting a “job description” instead of promoting (marketing) the job. Don’t do this! It is absolutely guaranteed to scare away the best candidates.

Most job descriptions are ineffectively written, listing every conceivable task or expectation without regard to priorities. There is no reason to place this tedious inventory of minutiae in a job posting, unless you seek to minimize your resume reading workload.

Job ads should highlight that which the employer and position have to offer. One or two paragraphs of positive, factual statements about the employer is sufficient. Examples: “a fast-growing nonprofit”, “the leading firm in this market”, “consistently profitable”, “a well-funded organization with a 20-year record of growth.”

Briefly describe some advantages or features of the job: “senior level management”, “reports directly to the President”, “responsibility for five departments”, “one of four managers with decision-making responsibility for strategy”, “opportunity to move up to Executive VP within three years.” Provide just enough detail to allow the reader to make their own first-cut screening decision: qualified and interested, or not. Ideally, desirable candidates will learn just enough to entice them to apply.

It is not necessary to describe the job in detail. Why? Because you are trying to find candidates with experience in this type of work–if they don’t know what the job entails, they aren’t qualified to do the job.

Some employers believe they must provide detailed information about the job. There is, however, no such obligation, and a look at other postings will confirm it’s not common practice. Listing responsibilities, expectations, procedures or any other buzz kills will just ruin the ad. (You can email more detailed job information to the candidate after you phone screen them and decide you are interested in an interview.)

The second biggest mistake: not stating the pay range. You have to provide candidates some idea of what the job pays so that they can self-select. Those earning way more or way less than the range know they shouldn’t bother applying–saving time for both you and them. But qualified candidates will be encouraged to pursue the position if they are within the pay range (or reasonably near).

If no salary or compensation information is provided, some candidates will just skip the ad. Depending on how the candidate searches for job postings, ads lacking salary information may not even be displayed. Finally, candidates often assume the pay is below average if the employer does not provide specifics.

The third mistake: overlooking keywords. Job postings are not just “classified ads” published on the web instead of the newspaper; they serve the same purpose, but accomplish it altogether differently. Job seekers don’t “go to” career sites and “look at” job postings, they find open positions using keyword searches, keyword alerts and keyword-based RSS feeds. The savvy employer includes every important keyword in postings. Additional keywords may be inserted at the end of the ad, they need not appear in the copy.

Here is a tip for increasing the quality and quantity of candidate responses: state that the employer pays a bonus in addition to salary. This works because excellent candidates know they perform well above average and wish to be rewarded for their performance. Also, applicants view the existence of a bonus plan as a sign of a dynamic, well-managed organization.

Ready to give job posting a shot? Go here.

Michael G Smith

There are two ways in which a bad hire can harm the organization: acts of commission and acts of omission. In the former, the employee commits an act that directly threatens the organization, such as theft or inappropriate behavior. In the second, the employee fails to properly perform his or her job. In one case I’m aware of, a company’s controller embezzled a large amount of money; however, it was the controller’s incompetence at managing the firm’s cash flow–not the embezzlement–that caused the business to fail.

When assessing a candidate’s qualifications for employment, one must guard against the temptation to make hiring decisions based on interview performance. Individuals who change jobs frequently may be very skilled at interviewing–they’ve had a lot of practice. Excellent employees, however, have little experience interviewing and may not promote themselves well. Therefore, hiring managers should not judge candidates on interview performance, since the best interviewers may be the worst employees!

More importantly, a candidate’s testimony about work history is self-serving: the better they make themselves look, the more likely they are to receive a job offer. Unprincipled candidates will utilize fabrications, exaggerations, and omissions to manipulate the hiring decision in their favor–particularly with a trusting interviewer. If you accept a candidate’s self-description at face value, you may end up hiring the best fibber rather than the most truly qualified candidate.

The best way to learn about a candidate’s previous responsibilities and how well the candidate performed on the job is to interview those individuals for which the candidate worked (“references”). The comments of these individuals, taken together, provide a realistic picture of the candidate’s experience, abilities, and strengths, as well as weaknesses.

References need not be limited to those provided by the candidate. Prior managers or supervisors can be located by placing a call to employers listed on the candidate’s resume, through Google, LinkedIn and other sources.

Occasionally, a sneaky candidate will provide fake references (don’t believe it? search online for “fake references”). Verify the position and employer of the candidate’s references to make certain the individual who answers the phone is not the candidate’s confederate.

If you check references through people you know “in the business,” be careful that your networking doesn’t tip off the candidate’s current employer, causing embarrassment, or worse.

The longer a candidate has been in the workforce, the more extensive their reference trail. That’s one advantage to hiring experienced workers, you can be more certain they are problem free and well-qualified.

Michael G Smith

A loss of leadership will result in a stagnant or waning organization, yet many organizations are unprepared for the possibility that their top leader may become ill or disabled. A related problem is inadequate secondary management; leadership may be willing to delegate but lacks confidence that subordinates can handle the work. Similarly, if an organization has grown beyond the capabilities of its managers, further growth is jeopardized and new opportunities will languish unexploited.

An organization’s ability to produce results derives from its leadership and staff–its sole productive asset. The only way to improve the “product” of such an organization is by improving the quality of the employees, and the most essential employees are those who manage the organization. The better our employees are, and the more of them we have, the more output the organization can generate.

Employee Output

Research has demonstrated that there are enormous differences in the productive output of employees, and it is clear that high-quality (and highly-compensated) employees generate far more output per payroll dollar than average employees. Good employees are 50% more productive than average employees. Top employees are at least 2¼ times more productive than average (Hunter, Schmidt & Judiesch, 1990, Journal of Applied Psychology, among others).

Excellent Employees

The salary earned by an individual generally increases over time as they learn and gain experience; how far and how fast is a function, according to recent research, of general mental ability and conscientiousness (Schmidt & Hunter, 2004, Journal of Personality and Social Psychology). Individuals who posses these characteristics in abundance will be top performing employees who can learn quickly, function independently, and maximize output.

Increase in salary over time

Some individuals will accept lower pay in exchange for a more desirable or satisfying position–such as working for a think tank. The difference between what an individual could earn elsewhere and what they are willing to accept as a think tank employee has been referred to (by Larry Reed) as the “missionary discount.” Missionary discount notwithstanding, lower-paying organizations will lose good employees to those that pay better; many charitable and educational groups pay higher salaries than think tanks; and, as the employee’s financial needs and the salary discrepancy increase, the employee’s willingness to work for less may vanish (followed soon after by the employee).

Show me the money

Hiring and retaining excellent employees capable of becoming tomorrow’s leaders requires a financial investment. Where will the cash for this investment come from?

Spending less on current programs and cutting some of your least essential programs will free up cash for investing in leadership. These programs may be restored once revenue growth and improved efficiency are achieved. The organization should perform a cost/benefit analysis for each program and those whose benefit is less significant than the survival of the organization are candidates for reduction or elimination.

Consider asking donors to provide a “leadership development” grant that covers the cost of hiring a well-qualified leader. This requires a well-researched plan that itemizes the costs and the anticipated future benefits. Borrowing the money is an option too, particularly if it will be used to hire a fundraiser.

Solutions

Investing in excellent current employees is accomplished with direct monetary incentives and through leadership development. Salary and bonus are monetary incentives and excellent employees should be paid above-average salaries accompanied by generous opportunities to earn bonus tied to goal attainment. (For more on structuring bonus plans, see: Kaplan, Robert S.: “Strategic performance measurements and management in nonprofit organizations;” Nonprofit Management and Leadership, 11(3):353-370, Spring 2001; and “The Balanced Scorecard and Nonprofit Organizations;” Balanced Scorecard Report, December 2002, pp 1-4.)

Leadership development has an internal and an external component. Capable employees become leaders through practice and experience. Provide them with a specific project, set measurable goals, provide resources, and then get lost. Mentoring develops skills; micro-management does not. Practice must be supplemented by external training, the most important of which is formal training in an MBA program. Managers must be able to perform statistical analysis, manage information, construct and evaluate marketing plans, read accounting statements, and manage finances. Providing managers with employer-paid access to MBA courses will probably benefit the organization more than any other leadership development effort.

Investing in new employees is a constant requirement for growing organizations. Under-performing employees should be let go and replaced with high-performing, well-paid employees. The payroll will grow, but–due to the higher quality of employees–output and revenue will grow more.

Another Issue: Founder Flounder

Organization founders sometimes find it difficult to let go. One option is for the Board to create new positions and specify exact job responsibilities: the founder becomes President with a fundraising, PR, or research role, but no direct reports, and an Executive Director is hired to run organization.

Sometimes questions arise over compensating the founder in a new role, but there is a straightforward solution. Quantify the value of the founder’s contribution (aka: marginal contribution) by estimating what would be lost if the founder left. Place a dollar figure on this contribution, or estimate the cost to replace the founder. Compensation should be no more than the marginal contribution; or, if you prefer formulas: compensation <= marginal contribution.

Michael G Smith