High Output Management

by Andrew S. Grove

the need to keep up with or emulate someone is a powerful source of positive motivation.

Once someone’s source of motivation is self-actualization, his drive to perform has no limit.

Two inner forces can drive a person to use all of his capabilities. He can be competence-driven or achievement-driven.

objectives should be set at a point high enough so that even if the individual (or organization) pushes himself hard, he will still only have a fifty-fifty chance of making them.

A simple test can be used to determine where someone is in the motivational hierarchy. If the absolute sum of a raise in salary an individual receives is important to him, he is working mostly within the physiological or safety modes. If, however, what matters to him is how his raise stacks up against what other people got, he is motivated by esteem/recognition or self-actualization, because in this case money is clearly a measure.

For the self-actualized person driven to improve his competence, the feedback mechanism lies within that individual himself.

The most appropriate measures tie an employee’s performance to the workings of the organization. If performance indicators and milestones in a management-by-objectives system are linked to the performance of the individual, they will gauge his degree of success and will enhance his progress. An obvious and very important responsibility of a manager is to steer his people away from irrelevant and meaningless rewards,

Turning the workplace into a playing field can turn our subordinates into “athletes” dedicated to performing at the limit of their capabilities—the key to making our team consistent winners.

a fundamental variable that tells you what the best management style is in a particular situation. That variable is the task-relevant maturity (TRM) of the subordinates, which is a combination of the degree of their achievement orientation and readiness to take responsibility, as well as their education, training, and experience. Moreover, all this is very specific to the task at hand, and it is entirely possible for a person or a group of people to have a TRM that is high in one job but low in another.

The responsibility for teaching the subordinate must be assumed by his supervisor, and not paid for by the customers of his organization, internal or external.

Finally, at the highest levels of TRM, the subordinate’s training is presumably complete, and motivation is likely to come from within, from self-actualization, which is the most powerful source of energy and effort a manager can harness.

Though monitoring is on paper a manager’s most productive approach, we have to work our way up to it in the real world. Even if we achieve it, if things suddenly change we have to revert quickly to the what-when-how mode.

We managers must learn to fight such prejudices and regard any management mode not as either good or bad but rather as effective or not effective, given the TRM of our subordinates within a specific working environment.

The fact is that giving such reviews is the single most important form of task-relevant feedback we as supervisors can provide.

to improve the subordinate’s performance. The review is usually dedicated to two things: first, the skill level of the subordinate, to determine what skills are missing and to find ways to remedy that lack; and second, to intensify the subordinate’s motivation in order to get him on a higher performance curve for the same skill level

The organization of one of the managers reporting to me had had a superb year. All output measures were excellent, sales increased, profit margins were good, the products worked—you could hardly even think of giving anything but a superior review to the person in charge. Yet I had some misgivings. Turnover in his group was higher than it should have been, and his people were grumbling too much. There were other such straws in the wind, but who could give credence to elusive signs when tangible, measurable performance was so outstanding? So the manager got a very positive review. The next year his organization took a nose dive. Sales growth disappeared, profitability declined, product development was delayed, and the turmoil among his subordinates deepened. As I prepared the next review of this manager, I struggled to sort out what had happened. Did the manager’s performance deteriorate as suddenly as his organization’s output measures indicated? What was going on? I concluded that in fact the manager’s performance was improving in the second year, even as things seemed to go to hell. The problem was that his performance had not been good a year earlier. The output indicators merely represented work done years ago—the light from distant stars, as it were—which was still holding up. The time offset between the manager’s work and the output of his organization was just about a year. Greatly embarrassed, I regretfully concluded that the superior rating I had given him was tota...

Finally, as you review a manager, should you be judging his performance or the performance of the group under his supervision? You should be doing both. Ultimately what you are after is the performance of the group, but the manager is there to add value in some way. You need to determine what that is. You must ask: Is he doing anything with his group? Is he hiring new people? Is he training the people he has, and doing other things that are likely to improve the output of the team in the future?

One big pitfall to be avoided is the “potential trap.” At all times you should force yourself to assess performance, not potential.

the performance rating of a manager cannot be higher than the one we would accord to his organization!

There are three L’s to keep in mind when delivering a review: Level, listen, and leave yourself out.

You should scan material such as progress reports, performance against quarterly objectives, and one-on-one meeting notes. Then sit down with a blank piece of paper. As you consider your subordinate’s performance, write everything down on the paper.

there are three possible outcomes. One, the subordinate accepts your assessment and your recommended cure, and commits himself to take it. Two, he may disagree completely with your assessment but still accepts your cure. Three, the subordinate disagrees with your assessment and does not commit himself to do what you’ve recommended.

If it becomes clear that you are not going to get your subordinate past the blame-others stage, you will have to assume the formal role of the supervisor, endowed with position power, and say, “This is what I, as your boss, am instructing you to do. I understand that you do not see it my way. You may be right or I may be right. But I am not only empowered, I am required by the organization for which we both work to give you instructions, and this is what I want you to do…” And proceed to secure your subordinate’s commitment to the course of action you want and thereafter monitor his performance against that commitment.

“Look, I understand that you don’t consider it worth your time to do it. But I want you to do it.” I added that “I guess there is a basic difference between us. The integrity of the performance review system is just more important to me than it is to you. That is why I have to insist.”

The applicant should do 80 percent of the talking during the interview, and what he talks about should be your main concern. But you have a great deal of control here by being an active listener. Keep in mind you only have an hour or so to listen. When you ask a question, a garrulous or nervous person might go on and on with his answer long after you’ve lost interest. Most of us will sit and listen until the end out of courtesy. Instead, you should interrupt and stop him, because if you don’t, you are wasting your only asset—the interview time, in which you have to get as much information and insight as possible. So when things go off the track, get them back on quickly. Apologize if you like, and say, “I would like to change the subject to X, Y, or Z.” The interview is yours to control, and if you don’t, you have only yourself to blame.

Describe some projects that were highly regarded by your management, especially by the levels above your immediate supervisor. — What are your weaknesses? How are you working to eliminate them? — Convince me why my company should hire you. — What are some of the problems you are encountering in your current position? How are you going about solving them? What could you have done to prevent them from cropping up? — Why do you think you’re ready for this new job? — What do you consider your most significant achievements? Why were they important to you? — What do you consider your most significant failures? What did you learn from them? — Why do you think an engineer should be chosen for a marketing position? (Vary this one according to the situation.) — What was the most important course or project you completed in your college career? Why was it so important?

Asking a candidate to handle a hypothetical situation can also enlighten you.

The candidate can tell you a great deal about his capabilities, skills, and values by asking you questions. Ask the candidate what he would like to know about you, the company, or the job.

Drop what you are doing. Sit him down and ask him why he is quitting. Let him talk—don’t argue about anything with him. Believe me, he’s rehearsed his speech countless times during more than one sleepless night.

After he’s finished going through all his reasons for wanting to leave (they won’t be good ones), ask him more questions. Make him talk, because after the prepared points are delivered, the real issues may come out. Don’t argue, don’t lecture, and don’t panic. Remember, this is only the opening skirmish, not the war. And you cannot win the war here—but you can lose it! You have to convey to him by what you do that he is important to you, and you have to find out what is really troubling him. Don’t try to change his mind at this point, but buy time. After he’s said all he has to say, ask for whatever time you feel is necessary to prepare yourself for the next round. But know that you must follow through on whatever you’ve committed yourself to do.

Your subordinate is a valued employee—of the company. You now must vigorously pursue every avenue available to you to keep him with the firm, even if it means transferring him to another department.

“You did not blackmail us into doing anything we shouldn’t have done anyway. When you almost quit, you shook us up and made us aware of the error of our ways. We are just doing what we should have done without any of this happening.”

he’s really made two commitments: first to a potential employer he only vaguely knows, and second to you, his present employer. And commitments he has made to the people he has been working with daily are far stronger than one made to a casual new acquaintance.

This subordinate is valuable and important because he has attributes that make him so. Other employees respect him; and if they are like him, they identify with him. So other superior performers like him will track what happens to him, and their morale and commitment to the company will hinge on the outcome of this person’s fate.

To design a good performance bonus scheme, we must deal with a variety of issues. We need to figure out if the performance is linked to a team or if it is mostly related to individual work. If it is the former, who makes up the team? Is it a project team, a division, or the entire corporation? We also need to figure out what period the performance bonus should cover, realizing again that cause and effect tend to be offset from each other, often by a long time, but a bonus needs to be paid close enough to the time the work was done that the subordinate can remember why it was awarded. Furthermore, we must think about whether the bonus should be based strictly on countable items (financial performance, for example), on achieving measurable objectives, or on some subjective elements that might get us drawn into a beauty contest. Finally, of course, we don’t want to devise something that pays out lavishly even as the company is going bankrupt.

The first would include his individual performance only, as judged by his supervisor. The second would account for his immediate team’s objective performance, his department perhaps. The third factor would be linked to the overall financial performance of the corporation.

The shapes of all of them approximate the curve representing the experience-only approach, but as you can see, while people start at the same salary level, they move up at different speeds and arrive at different places, depending upon individual performance.

Promotions must be based on performance, because that is the only way to keep the idea of performance highlighted, maintained, and perpetuated.

you’ll find two basic types of “meets” performers. One has no motivation to do more or faces no challenge to do more. This is the noncompetitor, who has become settled and satisfied in his job. The other type of “meets” performer is the competitor. Each time he reaches a level of “exceeds requirements,” he becomes a candidate for promotion. Upon being promoted, he very likely becomes a “meets” performer again. This is the person Dr. Peter wrote about.

But we really have no choice but to promote until a level of “incompetence” is reached. At least this way we drive our subordinates toward higher performance, and while they may perform at a “meets” level half the time, they will do that at an increasingly more challenging and difficult job level.

There are times when a person is promoted into a position so much over his head that he performs in a below-average fashion for too long a time. The solution is to recycle him: to put him b...

management ought to face up to its own error in judgment and take forthright and deliberate steps to place the person into a job he can do. Management should also support the employee in the face of the embarrassment that he is likely to feel.

In sum, we managers must be responsible and provide our subordinates with honest performance ratings and honest merit-based compensation. If we do, the eventual result will be performance valued for its own sake throughout our organization.

Training is, quite simply, one of the highest-leverage activities a manager can perform.

You yourself should instruct your direct subordinates and perhaps the next few ranks below them. Your subordinates should do the same thing, and the supervisors at every level below them as well.

distinguish between two different training tasks. The first task is teaching new members of our organization the skills needed to perform their jobs. The second task is teaching new ideas, principles, or skills to the present members of our organization.

For instance, a department that has 10 percent annual turnover and grows 10 percent per year has to teach 20 percent of its staff the basics of their work each year. Training even 20 percent of your employees can be a huge undertaking.