The Art And Science Of Motivation

TWSCO’s formula for measuring performance produces real results.

For most businesses, the greatest investment you will make is in your people. At TWSCO, not only are our people our biggest asset, they are also our biggest expense. To get the greatest return on our investment and protect that asset, we underscore the importance of sustaining a company culture that promotes employee retention and pride, and advances a positive reputation within the community. In other words, people want to work with us and they enjoy working for us.

The bottom line is that TWSCO is in business to make a profit, and turnover is both disruptive and expensive. Depending on the type and level of position, a good rule of thumb is that turnover costs the company anywhere from 25 to 250 percent of the annual salary of the exiting employee. The cost of turnover boils down to a number of hidden soft and hard costs, beginning with the loss of productivity, followed by internal disruption of the vacancy, external customer impact and the costs of advertising, recruitment and screening associated with filling the position. Once a replacement is hired, onboarding, training and ramp-up costs add to the overall cost.

Culture of Communication
Reducing turnover and keeping things running smoothly is about finding the right people for the right positions, then keeping them motivated. With 118 employees, it may seem like a daunting task to keep everyone happy and productive. But at TWSCO, a deeply rooted culture of respect and communication makes motivating employees much more palatable.

It’s no secret—people like food! From left, Mike Hall, gas technologies manager; Shawn Frankenfield, cryogenic manager; Omar Salazar, transportation manager; Jose Jasso, team leader; Grant Peltier, outside sales.

That culture starts with building relationships with employees—our internal customers. Our executive team is in dialogue with the employees every day, personally getting to know them. Listening to employees is a major part of our culture. When there are personal and company successes, it is important to recognize employees for what they do. When the company president shakes an employee’s hand, knows that individual’s name and sincerely thanks them for what they do, it can be an incredibly powerful form of recognition.

We also think it is important to host regular company and department events to foster employee bonding and trust. For starters, it’s no secret—people like food! At our semi-annual financial meetings, we prepare dinner for our employees and we have a full presentation about where we stand and where we want to be. We update and educate them on our sales, our revenues, our customers and our goals so they can see what is working and what is not. Transparency is critical to creating employee accountability. We treat our employees like owners and give them the tools they need to do their jobs even better.

Long-Term Solution
Some companies try to motivate their employees with a stress ball and a car wash. But when it comes to protecting your company’s biggest asset, it’s important to have processes in place that are long-term. Short-term gimmicks are just that, and their effects wear off quickly.

We developed a system that ties into TWSCO’s existing culture to streamline the process of feedback and reward for all TWSCO employees. The Performance Management System is the product of a collaborative effort among management and employees, combining those elements of trust, communication, empowerment and recognition in a structured process. On a basic level, the Performance Management System is our process of regular employee performance review and feedback. When it is integrated with and into the company’s everyday processes, the Performance Management System is a viable long-term solution and a vehicle for coaching and motivating employees.

Critical Success Factors
Critical Success Factors (CSFs) are the pillars of the Performance Management System. In our regularly scheduled performance reviews, we rate employees on five or six core CSFs—reference points that delineate what it takes to do a job successfully. We created the CSFs by partnering with our employees, asking them what they do, and then really listening to their answers.

Employee-level input in creating the CSFs is extremely important. The employees are the ones doing the jobs and are often the ones within the organization who are closest to the customer. When employees are closely involved in defining their roles and how they impact the company, the Performance Management System fosters a sense of ownership and gives employees a personal stake in how their contributions shape the overall success of the organization.

In addition to five or six core CSFs for every job, TWSCO has three broad CSFs for every employee, regardless of position. They are:

1. Safety: To follow and develop policies and work practices that support and promote a safe and healthy work environment, with a goal of zero safety infractions.

2. Compliance: To communicate, observe, audit and enforce standard operating procedures on a consistent basis.

3. Teamwork: To develop and work with high-performance teams in the spirit of trust and cooperation.

In each of these areas, the ability to partner and communicate timely and effectively is critical.

Kelley Craig (right), who works in the accounts payable department, receives two movie tickets during a performance review with Assistant Controller Maura Collins.

Measuring Success
Performance reviews let employees know that management is actively observing and listening to them. Reviews are conducted for every new employee after 90 days of employment. Thereafter, all employees are formally reviewed every six months. This clockwork of regular assessment ensures ongoing communication and coaching.

During a review, a manager assesses the employee based on the core- and broad-level CSFs. For each of the objectives, we use a scale consisting of five performance levels: outstanding, exceeds standards, meets standards, below standards or unsatisfactory. Employees welcome the feedback and they come to look for their regular reviews—it is not uncommon to see our employees reminding managers when their reviews are approaching.

Rewarding Employees
A critical tie-in to the employee’s annual review is merit compensation consideration. On the annual date of hire, employees are eligible for a merit pay increase that directly corresponds to their performance review. The CSFs are weighted, point-driven and tied directly to compensation. The higher they achieve on their Performance Management review, the higher the merit consideration. An overall score of below standards or unsatisfactory is not eligible for compensation consideration.

TWSCO President Scott Chenoweth (center) bonds with employees George Michalec, fill plant (left), and Alex Hernandez, CDL driver. Employee volunteers provide the entertainment at company meetings.

Many companies reward all employees with a uniform percentage pay increase. This is one of the worst things you can do as an organization. Rather than provide an across-the-board pay increase to employees, the Performance Management System’s compensatory tie-in rewards those employees who do their jobs well. This plays a critical role in creating accountability and motivating employees.

In addition to merit compensation, we reward strong performers by providing two free movie tickets for a rating of outstanding or exceeds standards with every review. This opportunity is open to all of our employees every six months. Our people especially like the program because it allows their spouses and families to be share in their success! Family participation exponentially impacts employee satisfaction.

While performance reviews help us identify and reward strong performers, at the same time it allows us to identify employees who are not contributing. Underperformers lower productivity and hurt the bottom line. Keeping those employees around only demotivates those employees who are contributing to the company’s success. Just as it is important to identify the “right” people, it is equally important to identify the “wrong” people and minimize your losses. I am a firm believer in firing the bottom 10 percent and replacing them with stronger performers.

Turnover costs anywhere from 25 to 250 percent of the annual salary of the exiting employee.

Effective Communication for Effective Results
The Performance Management System builds on a foundation of listening, empowerment and communication and provides structure to the otherwise intangible qualities that make a strong culture. During the ten years we have been using the Performance Management System at TWSCO, it has produced tangible results. We now have an average retention period of 10.2 years for salaried employees and 6.9 years for all employees combined. This goes a long way toward reducing the wasteful cost of turnover.

TWSCO focuses on rewarding performance. David Sullins, outside sales (right), receives an annual sales award from VP Sales Blake Felton.

TWSCO’s model has been successful because it relies on long-term solutions. When employees and managers partner in building a common point of reference to help measure and direct the success of the job itself, the Perfomance Management System can work just as seamlessly with 118 employees as it does with 8. The size of the organization is not important—it is about listening to your employees and taking an active role in providing quality feedback.

When you commit to creating a positive culture, what you will find is that your employees will appreciate their jobs and their employer. When you keep the people you have and keep them happy, it goes a long way toward boosting productivity and increasing your bottom line. That should be motivation enough for any company.

 

Critical Success Factors

Each Critical Success Factor is tailored specifically to a position using the input of the employees performing the job. There are no generic CSFs. Here are some example CSFs for common positions at a gases and welding distributorship:

CDL Driver

Objective: Accurately, correctly and safely deliver hardgoods and gases on time, while providing excellent customer service.

Critical Success Factors

  • Accuracy (Cylinder Exchange, Correct Product)
  • Customer Service (Projection, Impact, Responsiveness)
  • On-Time Delivery
  • Communication with Dispatch
  • Follows Special Instructions
Cylinder Handler, Barcoder

Objective: Ensure that cylinders and pallets are consistently and accurately staged, loaded and organized in a timely and safe manner to maintain efficient operations and customer satisfaction.

Critical Success Factors

  • Safe Cylinder Handling
  • Properly Stages Cylinders
  • Efficient Organization of Cylinders & Pallet Area
  • Accurately and Securely Loads Pallets & Trucks
  • Accurately Barcodes Cylinders
  • Prompt, Friendly Service
Repair Technician

Objective: Provide customers with accurate and timely diagnosis and repair of welding equipment, while ensuring the highest level of professionalism, projection and follow-through.

Critical Success Factors

  • Accurate & Timely Diagnosis
  • Accurate & Timely Repair
  • Meets or Exceeds Billable Hours Goal
  • Communicates Timely with Service Manager & Customers
  • Projects Professional Customer Service Impact
  • Maintains Required Certifications

 

Gases and Welding Distributors Association
Meet the Author
Wes Morris, SPHR, a member of GAWDA’s Human Resources Committee, is vice president, human resources at TWSCO, located in Houston, TX, and on the web at www.twsco.com.