Imagine that your company engaged the services of a contractor or consultant for a fee of, let's say, $80,000. In most organisations, that is going to be a fairly large expenditure that will rightly be scrutinised to ensure that the money is being spent on the right priorities, provides good value for money, and delivers tangible outcomes for the business.

The consultant or contractor would sign a contract with clearly defined deliverables, project timeframes and milestones, and measurable key performance indicators. Of course, the organisation will track, manage and review the contract to ensure the agreed outcomes are delivered. Poor performance by a consultant or contractor is rarely tolerated.

Now, consider all the people that your organisation currently employs. Let's say (for example) that on average they earn around $80,000 per annum.  But rather than a one-off, their salary is an ongoing expense for an organisation until the employment relationship comes to an end by the choice of either the employee or the employer. That sounds like a big financial commitment! 

Yet how many organisations can confidently say that they have in place for all of their employees:

  • clear and agreed deliverables or performance standards that they are held accountable for meeting;
  • regular tracking of their progress in meeting those objectives;
  • action taken to help them get things back on track when expectations aren't being met; and
  • consequences (positive or negative) for performance?  

Anecdotal evidence about the current state of performance management in Australia suggests that there is a significant proportion of employees without the fundamentals of good performance in place.  

So why then is it that managers in organisations don't treat the expenditure on salaries of employees with the same level of scrutiny that they do contractor or consultant fees?

Wages and salaries are almost hidden costs for managers as they generally don't need to seek approval to maintain the current roles in their team - like an annuity, it almost just rolls over every year.

The scarce resources are those that managers have to fight for and go through an approval process to obtain - which is often the case when engaging a consultant or contractor. And human nature is to take for granted the things that come most easily to us - therefore many managers aren't taking a mindset of getting the maximum return possible for the expenditure on their employees' salaries.

Managers would never be allowed to get away with financial mismanagement but are so often not held accountable for a lack of management of their people.  And any manager who thinks that performance management is an add on to their job that they don't have time for is clearly in the wrong job.

So what if organisations managed employees more like they do contractors or consultants - treat employees and the money spent on their salary as scarce and valuable resources?  

Why don't we continually 'recontract' with our people to ensure that the organisation gets the best return on money spent on salaries and employees are really clear about what is expected of them, how success is measured and know how they are performing (which is in fact what most employees want in any workplace).  

Sounds a little like performance management doesn't it?