Belief in Performance Management Starts at Top
The following case study appeared in the National Center for the Middle Market's latest research report titled "It's About People: How Performance Management Helps Middle Market Companies," which investigates the importance of performance management as a tool to enhance a company's workforce and explores their impact on overall firm performance. Click here to download the report.
Headquartered in Charlotte, North Carolina, LiftOne is a full service lift truck and material handling dealership with 17 branch locations throughout North Carolina, South Carolina, Alabama, Georgia and Tennessee. Learn more at: www.liftone.net.
After LiftOne bought a division of Barloworld in 2012, LiftOne president Bill Ryan found his new company in a challenging position. Both companies were in the business of selling and leasing forklift equipment, but the Barloworld enterprise was considerably larger — the whale to LiftOne's minnow. After the deal was finalized, LiftOne — which had been a $60 million company with 167 people in parts of two states — suddenly found itself a $180 million enterprise with 560 people in five states.
A lot can go wrong in a situation like that, and Ryan and his staff decided their best chance of ensuring the acquisition's success was to incentivize the combined company to work toward seven strategic goals. LiftOne's goals spell out targets for market share, after-market share, gross profit and return on assets; LiftOne's bonus plans are tied to these specific goals.
The company also has three people-related strategic goals, relating to on-site safety, employee engagement and customer engagement. LiftOne is comparing itself to industry benchmarks and has been making progress in all of these areas.
LiftOne's clear goal-setting—one of the tenets of effective performance management—has set the tone for other parts of the company. Every division of LiftOne displays progress monthly on a football field-like electronic grid showing progress toward some monthly financial goal. Not every forklift technician or service person is steeped in the finer points of finance, so the "advancing football" becomes an opportunity for division managers to educate their employees on concepts like gross profit. Getting into the end zone by the end of the month means a potential cash bonus for every member in the division so the employees stake an interest. The average bonus for non-management employees at LiftOne is now about $300 a quarter, Ryan says.
Another good performance-management tactic practiced by LiftOne is being willing to make the tough decisions. When Ryan arrived at LiftOne in 2005, it quickly became apparent to him that the company's culture was one of low trust and internal competition. With the help of his management team, Ryan figured out that the culture problem stemmed from a small group of people who had long since stopped seeing themselves as part of a team and after a few months, called those people into a meeting.
"Guys, we're going to go through a change here," he told them. "We're going to go from a low-trust, internally focused, internally competitive environment to an externally focused, positive, engaged, high-trust culture. You're either going to be with us or you're going to be against us." Within months, the people who had been poisoning the atmosphere the most were gone.
Ryan subscribes to one of the simpler truths of performance management — that it pays to let good performers know they are valued. There are executives who think it makes sense to operate in an atmosphere of fear. Ryan, who grew up as the oldest of eight children, isn't one of them.
"I'd much rather catch a worker doing something right" than doing something wrong, he says. "It can be as seemingly minor as someone handling a distraught customer very well. We will recognize that — privately at first and publicly later on. We spend a lot of time singing the praises of right behaviors."