Harvey Schachter’s column on business books in Toronto’s Globe and Mail newspaper is one of the better reads on what’s what in business publishing. He has just listed  his top ten business books of 2011. His first pick is “The Progress Principle: Using Small Wins To Ignite Joy, Engagement and Creativity at Work”.

As I read it, I am again reminded of the fact that employees have been telling us for decades what we need to do to inspire excellence in them at work. The question that I always ask myself when I read books like this is “Are we as managers prepared to listen? Or do we let our power position as managers convince us that we simply know better than they do what they need in order to excel?”

But what if I have been asking myself the wrong question? Maybe we are listening as managers. Our problem might be that responding effectively to what we hear from employees might be “harder” than simply saying the things and behaving recommended in “The Progress Principle”.

Turning the ideas in “The Progress Principle” and similar books into action requires that we as managers have a “systematic” way of evaluating our direct reports performance as well appreciating and encouraging their day to day efforts. All of the managers in organization need share that approach.  We need to be part of a thriving organizational culture that “does” the things serves both needs concurrently. We need to be able to provide our folks with performance feedback, including negative performance feedback. At the same time, we need to act as “encouragers and appreciators” of their efforts.  One cannot replace the other. As Jim Collins says in “Good to Great”, it is a matter of “AND not OR.”

Performance contracting allows exactly that “AND”. It is based on some simply stated but complex realities about the way that people behave at work.

  1. Every one has an internal mental model of their job.

Our internal model of our job operates concurrently at the conscious, preconscious, and instinctive levels. Emotional intelligence has made us all aware that we don’t just function as conscious beings at work. Our mental abilities span a complex of processing systems that include many pre-conscious,  instinctive components. Some of these ability systems process complex interpersonal messaging by the parts of our brain that have evolved to respond non-verbal social messaging behavior.

When we become part of a work group, we quite naturally build up a “mental model” of our jobs that guides each of us in the work that we do each do each day. Most of the time, we are not consciously aware of the tact that we are doing this. We simple do it. This model allows us to fit our personal work place activities into the “interlocked patterns of repetitive work” that get things done in an organization.

  • We all build our internal models of our job through interaction with all of the people that we work with, not just the people to whom we report.

Even the most solitary individual contributor at work does not work in a social vacuum. By definition, working in an organization means working with others at all levels to accomplish shared objectives.

  • Performance contracting takes that natural human process of building up and operating an internal model of our job and brings many of the components of it into conscious consideration.

The dialogue that a manager and direct report have as part of performance contracting surface many of the components of our internal model of our job into conscious bi-lateral consideration. One of performance contracting’s great values for boss and subordinate is that it makes explicit many of the implicit things that people need work successfully with others.

  • Performance contracting focuses on negotiating shared performance metrics, that are independently available to both manager and reporting individual.

Once such performance metrics are in place, and are regularly available both to individual and manager, the dynamics between the two of them changes in a fundamental, qualitative way. The manager is now free to do all of the things recommended in “The Progress Principle”.

Such praising and encouraging behaviours on the part of the manager are no longer experienced as “game playing” by “the person” who is destined to do a “subjective evaluation of my performance” at performance appraisal time. Instead, the manager’s praising and encouraging behaviors are experienced as true coaching – as messages that motivated by “helping me to do my best”.

The need to provide information about “how I am doing” is handled by the regular arrival of negotiated performance metrics that related to specific performance objectives. (See my previous blogs in this series for more about performance contracting works.) The employee is capable of evaluating personal performance independently of the manager. Most of them will. They will engage in “self corrective” behaviour when necessary. They will appreciate “coaching” information and encouragement from the manager. As a result, their work related engagement increases substantially.

Performance contracting is a necessary part of increasing employment engagement. Organization leaders, the key players in the senior inner circle, must provide the performance contracting processes and training if they ever expect their managers to successfully implement the kind of behaviour recommended in “The Progress Principle”.  The top leaders need to provide shared forward looking performance contracting processes that liberate each manager to effectively praise and encourage. These few individuals need to practice it as well as preach it. They need to support the independent delivery of performance metric information to their own direct reports, and to each employee. Doing so will liberate organizational individuals at all to truly experience encouraging and praising behaviors on the part of their managers. Replacing performance appraisal with performance contracting is a necessary pre-condition to successfully increasing employee engagement.  “Shape The Future, don’t appraise the past.”™