Through our work with hundreds of healthcare facilities and direct observation and research of high-performing organizations, Baptist Leadership Group (BLG) has identified an integrated structure of five essential areas organizations should focus to achieve and sustain desired outcomes, The Keys to Performance Excellence.  The Keys to Performance Excellence can help an organization unlock the door to organizational excellence through execution.  The keys consist of:

The essential first key BLG recommends be implemented is to Hardwire Success through Systems of Accountability for the achievement of desired outcomes.  The most effective way of Hardwiring Systems of Accountability, to create a culture of achievement and execution, is through the adoption of a leader evaluation system designed to focus on outcomes and not processes, which is essential to creating an organization of owners.  Many organizations have evaluation systems in place that allow leaders who do meet defined goals, to receive good evaluations in their organization.  This process will not establish long-term success in any organization.

 

When an organization’s leadership team and employees become owners and are aware of who is responsible for achieving results they are more motivated to reach and exceed goals.  At BLG, we define two kinds of accountability that are essential to the creation of a leader performance system that drives outcomes – The Whats and The Hows.

 

The Whats are defined as the objective, individual measurable outcome metrics aligned with the annual goals of the organization.  The Hows are defined as the personal, day-to-day observable behaviors essential to achieve the goals of the organization.  The goal of this two-part article is to provide you with guidelines for developing and writing effective goals (Whats) and establishing clearly defined behaviors (Hows) to create clarity of expectations with a focus on outcomes that are managed across the organization with similar consistency and predetermined consequences.

 

 

Every organization we have worked with past and present has had strategies, goals, and values and all have been good.  This is typically not the issue.  The number one opportunity we see, is not developing goals and values, but rather using them to create and sustain organizational excellence.  If an organization desires to be successful for their patients, employees, physicians, and communities, it must first narrow the focus of the organization each year with a balanced approach across 10 - 12 outcome-based organizational results, have zero-tolerance for noncompliance and poor performance (outcomes and behaviors), and establish predetermined consequences, both positive and negative, for all key success factors of the organization.   Baptist Health Care’s Pillars - People, Service, Quality, Finance, and Growth are an example of this.

 

Once an organization commits to moving away from a culture of effort and creating a culture of outcomes, each leader needs to establish 4 - 8 goals that are consistent with the mission, vision, values, and objectives of the organization and are carried out through every day decisions, behaviors, and actions.

 

Baptist Leader Group created a simple ten question Evaluate Your Leader Evaluation Process to evaluate your current leader performance evaluation system and determine if the systems of accountability you have in place will be helpful in achieving and sustaining the organization’s operational outcomes across all strategic priorities. Access the Evaluation 

 

Clear expectations regarding job performance based on outcomes is a wonderful thing at all levels of the organization.  Baptist Leader Group recommends the evaluation process discussed during the Webinar cover all leaders (senior leaders, directors, managers, and front-line supervisors) of the organization.  In many organizations, a leader is defined as someone who manages a P & L and/or hires and fires.  Many organizations will adopt this model for other key positions as well for individuals in a leader (non-supervisory) role or their role impacts the entire organization, e.g., house supervisor.  While the process would be beneficial for the entire organization, our recommendation is to start the process with leaders, as leaders drive performance and set the tone for results and behavior.  Many organizations will ask when the process cascades to staff – my answer, immediately for good leaders.  A strong leader is going to finalize their goals, sit down with all staff, cover the objectives for the unit or area, and further discuss how each staff member’s behavior and actions contribute to the success of the unit and the manager.  We don’t know of any evaluation process that does not provide an open section for a leader to assess the role of the individual and their contributions to the unit as a whole.

 

To formally introduce the process to staff, we would first implement and sustain the process for at least one cycle with leaders.  After leaders have seen the benefits of the process, the organization can begin to create clear direction for all staff by developing individual job accountabilities that can be measured based on outcomes as opposed to subjective items and competencies that do not cover the actual performance of the staff member.

 

 

Please find a sample organizational approach to leader payout in alignment with the pay-for-performance platform being implemented across the country in many industries, especially healthcare.  In 2005, The Commonwealth Fund shared that 75 percent of all US companies were connecting at least part of employee pay to measures of performance and we know from our research it not only drives, but also sustains results.

 

Baptist Leadership Group encourages the senior team to consider a true merit incentive or a pay-for-performance model to ensure alignment when setting up ratings and weights for leaders’ goals.  This further demonstrates the organization's desire to improve and tie performance to outcomes.

 

In our experience, approximately 50 percent of organizations tie their performance evaluation tool to a “Pay-for-Performance” model in year one and the others wait until year two.  When they do, the most common approach is to use the overall performance score to determine a payout for a bonus and/or merit increase.  Base pay is adjusted using market scales. Each organization should decide on a set of scales for payout and if a maximum potential can be decided prior to launching, the scales should be established and communicated throughout the goal setting process.  The example below shares how a maximum potential bonus could be distributed across a leadership team.

Another organization tightened it up further providing payout to only those achieving goal or an overall performance score of 3.0 or higher.  The options are limitless based on the desires of the organization.  We like the thought of tying pay to outcomes as it creates a consistent and clear message, we have a culture of outcomes, not effort.

 

 

The best answer to this question is as soon as possible.  Creating clarity for leaders around annual objectives that support the annual goals of the organization is necessary and can be implemented at any time throughout the year.  While ideally the best time would be to implement at the beginning of a year, waiting a year to start the process would be detrimental to the organization as the best time to start holding leaders accountable for outcome measures is now.  Some organizations will adopt the process in the middle of the year (without a connection to pay) for leaders to become accustomed to the new process and further refine their goal writing ability.  All organizations we have worked with start the year with goals at the organizational level; this has never been the issue, but rather the issue stemming from too many goals at the organizational level and lack of alignment to outcomes for individual leaders.  The first step would be prioritizing the organizational annual goals and aligning individual leaders’ goals.  Once a senior team sees this is the best approach for sustaining outcomes for their patients, employees, physicians, and communities it can be implemented at any time.

 

 

Yes, especially when using individual performance to determine a merit or incentive increase.  Without a link to organizational performance, especially in organizations who have not conducted the alignment exercises, leaders could receive merit increases if the organization is not successful.  In the cases where we do not have alignment, merit could be paid during times of poor performance.

 

Many organizations will create strategic “circuit-breakers” that must be tripped prior to any incentive payout for leaders, with the most common being financial, but also quality and service indicators.  This continues to align leader goals to organizational performance.

 

 

The 5-point metric scale allows organizations to differentiate between three levels of high performance.  Those achieving target would be a three, those exceeding target a four, and those hitting stretch goals a five.  While we all know three would be an acceptable level of achievement, how many of you want to be a three on your evaluation?  The two additional levels of high performance encourage leaders to strive for the next level of success, creating improved performance across the organization.  Many leaders may have results below the national average, so first our goal would be for them to achieve the national average, but during the same year, we can also have them push for best practice targets in the stretch goal area.  We prefer the 5-point scale to the 3-point scale to create the drive for all leaders to perform at higher levels of performance.

 

 

You can contact Joseph directly to discuss an onsite meeting, telephone conference, or a connection with you and your senior team to see how the process could be implemented in your organization.  He can be reached directly at 850.377.1862 or through email at josephm@bhclg.com.  He is available to help your organization in multiple ways.  He can present to all leaders, help facilitate the process from start to implementation, or introduce the Leader Performance System as an accelerator to enhance the process.