What Would YOUR Employee Review Look Like?

Would you fire yourself based on the firm's results? Fortunately, David cannot fire you. Unfortunately, David cannot fire you.

Transcript

Blair: David, it's time for your annual performance review.

David: [chuckles] Yes. Oh, you wish you could give me one.

Blair: [laughs]

David: I'm tearing it up before I read it.

[laughter]

Blair: Are you familiar with the world's most famous book review?

David: No.

Blair: It begins, "I'm sitting in the smallest room in the house. Your work is in front of me. Soon it will be behind me."

[laughter]

That's the performance review I'm about to give you.

David: The truth is I started putting these thoughts together a couple of days ago, and then last night, I was looking at them again and thinking, oh, shit, this isn't very good. I got to do something else. I said to you, "Just let me sleep on this. I'll wake up early. I'll see if I can improve this a little bit so that it's listenable." I finally realized what the issue was. It was that there was this massive tension in my head that I just didn't know which direction to run to or let myself be dragged to because I feel like principals are consistently too hard on themselves and they're just not patient enough with themselves. Then I also feel like, man, if somebody else were running your firm like you are, you would fire them.

Blair: Yes.

David: I don't know how to resolve that tension because I don't want to give up either one. I really do feel like you're too hard on yourself, but I feel like you're sort of a shit boss sometimes too.

Blair: I feel like you're talking to me because when I read this, you're outlined. The topic is, what would your employee review read like?

David: Well, it did say Blair. I searched and replaced to "your."

Blair: [laughs] My first reaction was, oh my God, I hope my team does not listen to this episode because I've said to you in recent podcast and in private conversations that I have had the most unproductive year of my life in the last 12 months, and I feel like my teams would carry me if I had to sit through. We don't performance reviews.

David: Yes. Thank God.

Blair: At least I don't think we do. Maybe--

[laughter]

David: They do, they just haven't shared it with you yet. Has it occurred to you that what you view as your most unproductive year may be the best year they've had because you haven't monkeyed with everything?

Blair: Yes. That's sad but true. That's probably correct. Okay. Again, the episode is, what would your employee review read like? You're going to walk us through some areas where we're going to ask the listener to think about, well, how did you perform here, and would you fire somebody else who performed at the level that you performed at? Nobody's going to sit through this. This is 30 minutes of torture.

David: No, this is one where the employees are going to listen and then send a link to their boss and say, "Hey, did you-- this was a really good episode. You might really enjoy this."

Blair: Nudge is nudge. Yes. If your employee sends you this episode, first of all, welcome, and second of all, you'd better fire that employee or yourself. Okay, that's enough of the banter as they say. Where do you want to start with this meaty topic?

David: I don't do employee reviews of anybody anymore, and so I don't really know what they look like. I just picked six areas and I thought, okay, these are the ones that are probably the most important. As you hear these, I want you to get outside your body for a minute and objectively say, "All right, if a key employee was delivering this performance in these areas that you are, what would you say?" Would you put them on a performance improvement plan, PIP, or would you just fire them outright? I guarantee you, there would be a performance improvement plan.

I always feel like the principals are stumps in the swamp. If I'm in a boat, I've got to move around them. There's nothing I could do about it. They're just there. Whatever my recommendations are, it's like, well, in my deepest secret heart, I'd like fire these principals, but I can't. I'm going to have to navigate around them, and that's how it is. You can't fire yourself, but at least you could put yourself on a performance improvement plan.

Blair: Stumps in the swamp is going on the metaphor list. All right. Six areas. I'll just list them quickly. Financial performance, managing/leading, client perspective, your former employees will dig into that and all of them, your engagement level, and then succession. Six interesting topics.

David: Yes.

Blair: Some key points you want to hit before we get into these six areas where we're going to review the listeners' performance.

David: Yes. You're in charge. You've just got to accept that. You have to accept that you are responsible for your firm's performance. I don't care what the economy says. I don't care who you've hired. By the way, you hired them, or somebody that you hired, hired them. I don't care about your clients. You are ultimately responsible. That's the first point. Second is, and I kind of alluded to this earlier, you can be way too hard on yourself sometimes. Third, you can be way harder on other people than you are on yourself. That's that second, third one of those tensions. I don't know how to resolve that.

Blair: Right. It's likely you're in one of those camps. You're either too hard on yourself and you need to cut yourself some slack or maybe you're not hard enough in yourself and you're too hard on your people relative to the standards you're holding yourself to.

David: I don't want to do an employee review for myself, and I definitely don't want a performance improvement plan. I definitely don't want my wife to write that. I work too hard - that's like in an employee review - what would be your biggest weakness? Oh, I just can't stop working. I work too hard. I don't listen to other people that are giving me advice carefully enough. I just have to admit that stuff.

If I want to be judged by all these categories, it wouldn't really work in my business because I don't have a bunch of employees or something, but it's still worth thinking about. The first one is really financial performance. I don't know if it should be first, but it's the first thing that came to my mind. What's the profitability of your firm? How much are you paying yourself regularly without ever missing a paycheck? Is your firm growing? Assuming that growing is important to you. Do you have enough cash in the bank so that you're not out of panic accepting things that you otherwise wouldn't as you move along in this world?

How many of those employee retreats were really just vacations you took to Cancun and you're hoping that the IRS doesn't audit your stuff? How about timely and accurate reporting?

Blair: You're getting a little too personal here, David, but--

David: We just lost half of the people.

[laughter]

What about timely and accurate reporting? Apart from the actual performance, do you even know what the performance of the firm is? Do you know how to read financial statements? I was talking with a client yesterday and explaining to them that, as humans, we see financial information differently, each of us does. We need to have a financial performance benchmarking that's in front of us but it's going to look different for everybody. What is yours? In this firm, theirs was, well, how much money is in the bank? I think we could be a little more sophisticated than that, but it's a good start. I'm going to encourage you. It's a good start, but let's keep going.

Blair: All right. A lot of questions that you pose around financial performance and then the big net question here is, would you fire yourself based on the firm's results? If somebody else were responsible for all of these things and you'd looked at the results that you've achieved, would you fire them based on those results?

David: If you were having a difficult conversation with them, they would proceed to give you all the excuses, all the inputs that shifted the responsibility on to somebody else and you would say, "No, no, no, you're in charge." The only time this really comes up is if you want to add a partner or you have a partner and they disagree with the decisions or you want to sell your firm and they look at the financial performance of the firm and at this point, they just don't care at all about the reasons for it. It's like, it is what it is.

I'm not talking about last year. I think if you got through last year and maybe you didn't even make a profit but you kept most of your people and you kept your clients happy and you didn't go out of business, that's a win, but I'm talking about sort of in normal years. This is a normal year for all practical purposes. What's your financial performance? I guess it starts by saying, do you really understand your financial performance? If you don't, why is that not important to you?

When I look at all of the things that a principal should do, the financial performance of the firm is the most important. I think it's more important than culture. Culture would be second but financial performance is first but we somehow, I don't know what it is, whether we just feel like we've inherited this hand. This hand was dealt to us and it's all we got, and there's not much more we can do with it. It's just a fair question. What's the financial performance of the firm? I guess it all goes down to like, why'd you start your firm? What's the role of financial performance? How important do you think that is?

If you're running the company-- There's no CEO of a publicly-traded company that is not being held responsible by the public markets for the financial performance of the firm. That's how people lose their jobs

Blair: Who can't read financial statements. If somebody wanted to improve their financial literacy because this actually-- I see this a lot as I'm sure you do at the beginning of some of your consulting relationships where business owners have run a business for 10 years or so, they don't have the minimum level of financial literacy. Where do they get it? Some books.

David: Some books. I wrote a book on that. Thank you for teeing that question up.

Blair: You're very welcome.

David: There's lots of free stuff on the website like the performance benchmarking, how to pick one thing, the eight cages on your dashboard. There's lots of free stuff in there or-- I sell a benchmarking service. I'm not trying to sell any of that stuff. I'm just saying that the answers are out there.

Frankly, our industry is not all that different from any other professional service firm. What happens is we lock onto something and we look down at that and we don't look up and think about the bigger picture. We look down and we fixate on, "Okay, how much money is in the bank? What's our net profit?" or, "Hey, I'd like to hit 10 million this year, did I hit it?" regardless of what net profitability is. You just need to lift your eyes up and be responsible and pretend that you have a CPA team that's going to give you an employee review based in part on the financial performance of the firm.

This is just part of what it means to run a firm, and it's what you owe, not just to your team to run a really viable firm, but also what you owe your clients. If you really believe that what you have to offer is valuable, then you need to be a viable business in order to keep doing that. It's a little bit like putting your own oxygen mask on first. That's why it's first-tier financial performance.

Blair: Okay. Would you fire yourself based on the financial performance of the firm? The second area is managing/leading.

David: Yes. This one's a lot harder to quantify. I think a lot of principles believe that they either have a fantastic team of people or they've just got a lot to bad apples and the problem is them. I just don't think the problem is them. People are pretty much the same everywhere, and you get what you put up with or you get what you let slide through the cracks when you hire somebody not carefully enough.

If we put a completely anonymous survey in front of your team, let's say it's on a seven-point Likert scale and we force them to provide one number, maybe we even pose it as a specific question that says, okay, pretend that you've left X firm and you left on good terms. You hear that a friend of yours is thinking about accepting an offer to the place where you used to work, where you left on good terms, assuming they were fit for that job, they were capable of whatever the firm was hiring for, would you encourage them to accept that offer? You ask that anonymously and you see what you get. What you're looking for is somewhere between six and seven on a seven point scale. It could be six because there are always some people that slip to the crack, but if it isn't that, then what does that mean? What does it mean to manage and lead?

Well, that's a really complicated question. How consistent are you? How disciplined are you so that when you provide some directive or feedback, you're doing the same thing? Are you conflict-averse or can you have those difficult conversations? Do you treat people fairly? What's the DEI level of your firm? I don't even know how to start because there's so much to talk about. Really, other than the financial management, the whole managing and leading, that's really what you are.

You happen to be a manager or leader in this particular field that you and I serve, but, at essence, you're a manager and leader, and all of those things that you believe about people and how they change and how communication is important, those could easily transfer to any other job at the core of who you are. I think personally, there's a lot of overlap between how you are as a parent, if you happen to be one, and how you are as a manager or leader. If we're going to just ask that one question, what's the score that you're going to get, and what kind of feedback would you give yourself if you were a disinterested third party observer?

Blair: It really is the net promoter score of leadership, isn't it? because it's a willingness to recommend the firm. The NPS question is, how likely are you to recommend. Is that a question that you pose to your clients?

David: I do. Yes. Every employee gets that question and we score it and then we report on it to our clients, the principles, and it's always pretty interesting. When it's not a great score, like if it's in the fives or something, then something is wrong, and what's wrong is at the management leadership level. It manifests itself below, but that's not the source of the issues. The source of the issues is management/leadership all the way back to the kind of people that you're hiring and then what you're doing with them after they jump aboard.

Blair: Yes, it's on you. You hired them, you lead them, you manage them, you put up with them. You don't work to improve them, you don't let them go, et cetera. It all shows up in the answer to that one question. Wow.

David: Yes.

Blair: Third area in our owners perform review is a client perspective. What do you mean by that?

David: You're in the business of doing work for clients. If you didn't have them, then you wouldn't have a business. What do they think of your firm, not just you personally, but what do they think of your firm? What do they think of the account manager that you've put a stamp of approval on them because they represent your values well? How hard they work, how courageous they are, how well they explore and ask questions, how good they are at pushing back on things.

You can look at some more sort of mechanical measurements too. Are you getting referrals from your clients? Are they eager to pay you without arguing about it? Are they really ambassadors within their firms where something needs to be sold at a higher level and you don't have access to those people, but they go to bat for you because they know that what you are recommending is in the client's best interest? Do they think they receive value for the fee?

Now, there are times when you're going to lose a client relationship through no fault of your own. You might get a really great score on this front because you can't control how they are on that side. There's so many other factors that come into play, but I don't know how I would do a scorecard for you if I'm giving you an employee review, unless I talk to your clients too. The higher up you are on the strategic ladder, there's going to be room for clients who just don't like you or don't respect your feedback. That's totally fine. As people in terms of doing what you say and listening carefully enough, that shouldn't be an issue. I don't think this is bigger one, but I think it needs to be included the whole client perspective.

Blair: Your point on the more strategic, the nature of the work that you do, the less important it is. I'm paraphrasing you, and correct me if I'm getting this wrong. It's an interesting one that the more strategic you are, the less it's important that the client likes you. Is that what you said?

David: Exactly right. Yes.

Blair: When you're in the implementation business, the failure to serve, to be service-oriented, the failure to be likable, that becomes a bigger issue.

David: It's like at the implementation level, you are more of an order taker. You're doing what you're told. You're meeting deadlines. At the higher level, you are pushing back against things that have become for them. They may or may not want to face them. You're holding the dog's head and forcing them to look at the mess they just made. That's what happens a higher up you go on the strategic ladder.

It's not completely infallible feedback, but years later-- Remember that hate sandwich episode we did where a client needs to love you at the beginning, then they're going to like, "Oh, can't believe like--" This is hard to work with them. They keep pushing back. They hate you in the middle. then a year or two later, they love you. It's sort of like that. It depends a lot on when you ask feedback.

If you had the opportunity to ask clients what they thought of working with you, their memories should be that, wow, they really pressed the envelope. They really did what they said. They made us think in ways that we never would've. it wasn't just you, but it's the people that they interact with that you're responsible for on staff. I used to get asked a lot when I would explain what I was doing for a client, they would say, so I assume you're going to talk with our clients as well. They always wanted me to.

I didn't build that into the pricing, so it was never the case, but it was always pretty interesting when I did. I remember meeting with seven different department heads of one of my clients back when I did do this and it was shocking how much similarity there was between the seven different sources within the company. you have a reputation with clients, whether you know that or not.

I think it's a part of all of this. It's not the most important part of it, but it is a part of it. You're in charge of a firm that claims, look at the promises you're making on your website by God, you're claiming to change everything about their brand or their digital tool. Now just step back. Do you really want to promise that? I don't know. I'm just yammering right now.

Blair: It'd be interesting to see-- I guess that would be a classic net promoter score, would be, if you're going to ask one question, how likely are you to recommend? To your point, it's likely to change over the lifetime of the relationship?

David: Right.

Blair: Not just like my initial thought is. It's going to go down over time. You referenced that episode we did a couple of years ago. It doesn't necessarily go down. It often goes through this dip, and then they come back up out of it. It'd be interesting to get that perspective. Even a year later after the bitter breakup and then they've hired somebody else and they've gotten used to this somebody else, do they look back on their relationship with you more fondly or does their new relationship make them realize how horrible you actually were?

David: This is where we have a bias problem because every time we get a new client, we hear the problems they've had with the agency they're firing, and so we assume that we are so much better than other agencies. It's like, no, no, no, no. You are viewed as much better than the agency they're going to fire. That is not fair. You're picking one point in time and you're adding another point in time. Let's flip that around. Let's talk with the clients that are firing you compared to the agency they're hiring. We feed this really strange thing in our heads, and it's weird.

Blair: We're turning the employee performance review around and doing this for the firm principals. You've already addressed three areas where you would have them question their performance, financial performance, managing/leading, and then we just talked about client perspective. The fourth one is back to managing/leading. It's around your former employees. Just like we were talking about, it'd be interesting to hear from former clients.

David: This is one of those bounce-back things where if you ask this question at the wrong time, the employee that's leaving for greener pastures somewhere else, you might not get a fair answer. I want to ask you this question because I see more and more of this happening. By, ask you, I mean the listeners. How many rebound employees have you gotten? These are people that were valued, they left for whatever reason. Maybe it was they just really wanted to be a part of a startup or maybe they wanted to make a lot more money or something. They left on good terms, and you were sad that they left.

Then they contacted you out of the blue two years, four years later, and they wanted to come back, and you were excited because they came back with so much more experience. They already knew how things were done. They obviously thought highly of the firm, or they wouldn't have even reached back out to you. More and more of that is happening. Those rebound employees are fantastic. Even if it hasn't happened to you, can you see some of these people coming back and working for you? That's a pretty interesting question.

Blair: You're doing a reference check on a new hire, and you call one of their old employers, and that employer says, "Wait, that person's in the market?" They realize that they'd love to have them back. Is that happening for you? Are you getting people who work for you once wanting to come back? I think that's a great test.

David: I do too. I guess another way to measure it, if you're a small firm and maybe this hasn't happened to you, do you stay in touch with some of these people? In a very transparent moment, if you ask a former employee the impact you had on their lives, most of them are going to tell you or maybe they'll tell somebody else. They'll reminisce about, "Oh, man, I didn't learn as much anywhere else as I learned there. That put me on a path for a great career. That's where I learned what it meant to manage and lead other people. That's where I learned how to manage conflicts with clients."

That's the firm you want to be. You don't want to be the firm that everybody used to work for. You do want to be the firm where people said, that is where I learned so much, and if I ever get a chance, I'm going to go back there. If that just never happens to you, or it never even occurs to you, then chances are, maybe you need to fix that. Maybe it's not a place where people want to come work.

If you think about CBP down in Miami for years, that was a place where everybody went. They knew they would hate it and they would work 80-hour weeks, but it launched their careers, but nobody ever wanted to go back there. That's where they went to launch their careers and never wanted to be back there. We want to be the firm that launches their careers that they also want to go back to someday.

Blair: I've heard you say many times that you, talking to the listener here, the markets that you and I serve, you will not be remembered for your work. Your legacy, your lasting impact will be the people who worked for you and the impact that you've had on their lives. I think that's so profound. It's something until somebody be like you points that out to them, I don't think most people realize that that is going to be their legacy.

David: That was the foreword in an earlier book I wrote. The whole point was, do you want to change the world? Because most of the people listening to this want to change the world. I would say, if you want to change the world, start with how you treat your friends and your kids and your family and then how you treat and mentor your employees. That'll be enough. You don't need to do anything else.

Maybe some of you will change the world by the work you do for your clients, but that is such an empty pursuit. It's so unlikely to happen. 10 years later, you talk with your former client and they will barely remember the name of your firm. They probably won't remember any campaign you did for them, but talk with an employee who worked with you 10 years ago. They'll remember every doggone thing about your management style, and that's what you need to be measured on.

Blair: That's profound. The fifth area we're going to measure the performance of the creative entrepreneur is engagement level. We mean your engagement level, the engagement level of the principle.

David: Exactly. If you had an employee, especially if it was a key employee who was as engaged as you are, what would you say about them? Would you say that they're mailing it in or would you say that they are just regularly surprising you by going the extra mile and thinking about how our firm could even be better? That's what we're looking for. It's the same kind of thing you're looking for. In an employee, you're looking for somebody who thinks like an owner. Are you thinking like an owner or have you cashed it in and you're just coasting along?

Blair: David, I'm just tired. I just need a vacation, again.

David: "Too tired for me." That's what my granddaughter says. "Too tired for me." There's room for us to have engagement levels that wane and wax, they go up and down. I understand that. I'm just talking about for extended periods of time. When you have employees that get together and they have an intervention and they urge you to take a sabbatical, that's a bad sign, right?

Blair: Yes. It's a sign of what's happened to this point, but probably you should take that urging seriously. I think of this and-- just turning this back into myself again and trying this on. I've said a few times that I haven't been all that engaged over the last year. It's really important to my team that I am mentally engaged. They're okay with me coasting. They're okay with the fact that I need a break and I'm not going to get a lot done for a little while. What they're not okay with is not being mentally engaged.

I had that realization recently and it really struck me. It's like, you can sit there and not do anything, but your brain still needs to be engaged. I need to be able to bounce stuff off of you. I need to feel the excitement emanating from you. You don't actually have to do anything. You just have to be mentally engaged.

David: I'm just letting this slide right by.

Blair: Stop talking, Blair, stop talking.

[laughter]

I really appreciate the therapy. I feel like I should pay you for this.

David: Part of it is, you've still got to do some things that you don't want to do because that's what's required for the job, but how would it feel if you listening here were working for somebody that was as disengaged as you are? What kind of a job would you do? Because people are looking at you and saying, "Oh, I can match that engagement level. Actually, it's not that hard.

Blair: No, it's pretty easy around here. This is it, is it? Bar's pretty low.

David: You wonder why they're not necessarily engaged. I'm not trying to beat people up, I just want you to think about it a little bit differently. As a leader, there are times when you're not going to feel as engaged, but it is not optional for you to do the things that the business needs of you. It just isn't. If you consistently bump up against that wall and the business is asking things of you that nobody else can do and you aren't willing to do them, then it's probably time to think about refreshing the firm, rethinking the role that you have, or maybe even moving on possibly.

Blair: All right. The last area we're going to measure performance here is succession planning. I was A, surprised, but B, pleasantly surprised to see this on the list. Let's talk about why this is important.

David: One of the things that I hear consistently that makes principles nervous is that they only have one copywriter or one software engineer or one UX person or one amazing designer or something. They feel like this is a single point of failure, SPOF if you want to look that up, and it makes them nervous. You, of course, are a single point of failure at a firm, not for everything, but for a lot of things.

Here's the way to ask this question, if you decided pretty quickly, there wasn't a lot of preparation time that you wanted to take, let's stretch it out and say a six-month sabbatical. How would your firm do during that time? Would it barely coast? Would the top begin to stop spinning and eventually fall down, or would it just not lose much momentum? We ask our employees to not be single points of failure. We say, "You're an account manager, and when you've gone on a two-week or, if we're talking about Europe, a four-week annual leave, we don't want things to fall apart." The bookkeeper, the accountant, when you leave, we can't miss things. How are you doing about that yourself?

It's partly your responsibility to be running an organization where there aren't single points of failure. The best way to think about that is just, could you take a sabbatical, and what would happen in your absence? We've also done an episode on that too. What happens when you're gone? What happens when you're not there? Some things are obviously not going to happen, and that's fine, but the important, critical things need to keep happening. The top needs to keep spinning. Somebody else needs to spin it. How have you thought about that?

I don't mean eventually selling your firm. I don't mean succession in that sense. I mean the absenceses of leadership, hands-on leadership when you're not available, or when you aren't engaged, going back to that previous point, who steps in for you when you aren't? In a more typical nuclear family, obviously, when one parent's struggling, the other one usually picks up the slack. What happens in a traditional business, especially if you don't have a partner?

Then when you think about applying this to a firm with multiple partners, that is always-- I just call it the penultimate sign. It's the next to last sign. When the other partners look at each other then they have these quiet conversations that don't include you and they feel like you're not caring your weight anymore. There are times, maybe four months, maybe a year, where that just happens. If it's long-term, then you need to think about I guess tying your engagement level to your succession thing.

Who are you grooming to step in for you on a short-term basis? Just like you would ask your employees to constantly cycle through people through the firm who can contribute. They learn the right ways to do things, and we have a system for it because we assume we're going to keep losing people. You're the only person that doesn't rotate. It requires some unique thinking for you because you don't rotate, but your engagement level is going to go up and down. What happens during those times?

Blair: Yes. You ask your employees, your team members, who's covering for you when you're on vacation? You're not just asking that question, you're planning for it and pose the same question to yourself. If you're going to take that sabbatical or even just a two or four-week leave, who's covering for you?

David: Yes.

Blair: Okay.

David: I can't fire you. That's good news for you, even though I have fired some of you.

Blair: That's another episode.

David: That's another episode. Yes. You're the stump in the swamp. What's it look like at your firm? What does your employee review look like? I guess the way we typically try to solve this is with 360-degree reviews. I don't like anonymous ones. I don't even care too much what some people think of you at your firm, their opinion isn't all that important, but the people whose opinions I trust, I do care what they think of you. It's just interesting to flip this around, and I go back to that tension, which I have not resolved. You are way too hard on yourself sometimes. Other times you're not nearly hard enough on yourself. I don't even know how to resolve that.

Blair: The podcast episode that launched a thousand introspection. David, thank you. This has been great.

David: Thanks, Blair.