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Good Performance

Does your company measure up?

It's easier said than done: building a company based on performance instead of seniority, credentials or contacts. But it's hard work that will pay off in the long run, says Roger Fritz, president of management consulting firm Organization Development Consultants in Naperville, Illinois. "In a performance-based company," he explains, "measurable objectives are negotiated, agreed on, then monitored, and rewards are based on performance."

Fritz has created a quiz to help you determine if your company is performance-based. Answer "yes" or "no" to each of the following questions:

1. Do you have a strategic plan?

2. Do your employees understand the particulars of your plan?

3. Have you defined key job duties for each employee and set performance standards in each of these areas?

4. Have you established connections between performance and salary increases or bonuses?

5. Does your performance appraisal system tie individual performance to key job duties? Does it show employees how their performance is tied to overall company performance?

6. Is the company mission statement placed prominently in business literature and advertising?

7. Do employees have job descriptions that define their responsibilities?

8. Does your performance appraisal system contain goals in each key area for the quarter?

9. At the end of a quarter, do employees submit brief summaries of their performances?

10. Do you keep the summaries until year-end, at which time you meet with individual employees to discuss job performance in detail?

11. Do you hold a group meeting with employees once a month? The topic: "How are we doing on reaching our goals? What changes, if any, need to be made to attain them?"

12. Are salary increases and incentive awards tied to how well individual employees meet their responsibilities?

Total up the number of "no" answers. If you have one to four nos, you have some good intentions but a lot of work to do; five to seven means you have not yet begun to put even basic requirements in place; and eight or more means you are most likely running your company by emphasizing factors other than performance.

If you want a better performing company, work toward being able to answer yes to all 12 questions. "Being performance-based frees you from dependence on any one person," says Fritz. "You'll build an organization that is more than the extended shadow of its founder; it will be stronger than the strongest individual."

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This article was originally published in the June 1998 print edition of Entrepreneur with the headline: Good Performance.

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