Teamwork is more important to small businesses than ever, but we still recruit, retain and reward individuals. How does an organization shift from solely evaluating individual performance to evaluating team performance?
In this episode, Landon reviews the key points from a recent article in the Economist Magazine on evaluating team performance, and shares how teams are formed and evaluated at Redefined Horizons, the small surveying and mapping business where he works.
Teamwork is more important to small businesses than ever, but we still recruit, retain and reward individuals. How does an organization shift from solely evaluating individual performance to evaluating team performance?
In this episode, Landon reviews the key points from a recent article in the Economist Magazine on evaluating team performance, and shares how teams are formed and evaluated at Redefined Horizons, the small surveying and mapping business where he works.
The title of this episode is evaluating the performance of teams, small and large. It's inspired by magazine in The Economist. So I am a subscriber to The Economist, I highly encourage you check that out. If you are a business owner, and you enjoy economics, I picked, I picked an issue up at the airport a decade ago, because I was bored and didn't have anything else to read. And I've been a subscriber ever since. So it's, it's a great magazine. So they've got a column in the magazine called Bartleby. The column is talks about business issues. And they had an article in that column a few a few months ago, so it was in it was in November, and the title of the article, I'm just going to read it here. So I make sure I get it right, is how to manage teams in a world designed for individuals. So if you're on YouTube, you'll be able to see it here it is, I have pulled up on the economist website. You do have to be a subscriber. After you, you know, I don't know three or four articles on the website yet a paywall, so you do have to be subscriber after you've read a couple articles, but you should be able to get the first article for free. So if you want to check this out. So that's what we're going to do today. I've never tried this before. So this is a first for the podcast here on Episode Six. But I'm going to try this format and see how how it works. And basically I'll just I'm going to take an article from the economist or Wall Street Journal, Harvard Business Review or MIT Sloan I subscribed all those if I have an article that I think is that I enjoy that I think super applicable to surveying and mapping businesses. I'll try and talk about the the main points in the article and how they apply. I don't know if it's gonna work, but we're gonna try it. So we'll see. We'll see how that goes. today. You guys, if you're one of my three podcast listeners, you can let me know what you think of this format. And certainly, if you liked the format, and you have an article that you want me to talk about, send it to me. Or if you're willing to be interviewed about an article, I would love to do that, too. So before I dive into the article, and we're going to cover the main points, I want to tell you a story. This is a true story. It happened to me two years ago. But it's related to the theme that we're going to talk about valuation of teams. So I was working as a licensed land surveyor for a large civil engineering company. I've been there about a year and they. And so the CEO, the chief operating officer of the company, has a pretty big companies founder people came to basically take me to lunch for my one year anniversary, which was very flattering. I'd never talked to him before. So he called me up and said, Hey, I want to take you in your boss out to lunch. And I've been with this year. And I was super stoked about that. I don't I don't know that I filled a super critical role there as a pretty big company. And I was just a project surveyor. But so I was I was I was deeply flattered that he would want to talk to me. And he was super nice guy. I really liked that. I think he's still the CEO at the company. I haven't been there for a long time. But he's a good guy. And he took me my boss to lunch. So, you know, he was primarily wanting to get my feedback on what you know what I thought of his company. And so one of the things I told him is, and I remember this, because he laughed, I said, you know, I've never worked at a place like this before. I said, You guys aren't really a single organization, you're more like a loose core coalition of warring tribes. And so he laughed for, you know, for half a minute or minute. And he said, Well, you know, tell me what you mean by that? I said, Well, you know, I've never been in a at a at a place where there's so much conflict, conflict and backstabbing between teams inside of the organization, and I said, you know, I'm just being honest with you. You know, I've worked in several different places. I've never seen a company with this kind of culture before. And he, after he got done kind of having a chuckle, he he got serious. And he said, you know, he said, I appreciate you being honest with me. He said, we recognize that this is a problem we have, you know, on the executive management team, we know this is a problem, and we're trying to think about how we might fix it. He said, We don't have answers to that yet. And so I appreciated that he you know, I was honest with him, and he was honest with me back right, which is great. That's a good, that's a good CEO. And then one of the things we talked about a little bit there at that lunch was, you know, part of the reason why that culture had permeated there. I'm sure there were a lot of reasons but one of the reasons was they had some poorly designed financial incentives. So they had a lot of fairly small teams, so five to 15 people. Each team was assigned to team leader and the way they had set up the compensation there, that team leader received a large portion of their annual compensation based on basically the amount of gross revenue that that he, he or she booked. So they, we have to have what they call what they call the book, they call it a green book. And you know, the more dollar volume of work that was in the green book, essentially the the bigger your urine bonus was in the urine bonus was a significant part of compensation that was not a team leader. So all of my work was going into my boss's book, which is fine, no problem with that I actually negotiated an hourly position at that company. So that wasn't a problem for me. I wasn't salary. But one of the consequences of that was there was a lot of backstabbing, and and cutthroat competition between team leaders. So rarely did team leaders work across team boundaries, when that would make sense, either for the client or the organization is the whole so part of what would happen, just as an example is, you know, maybe one team was having a slow February and another team was was grinding people, because they were overwhelmed with work. The team that was buried would not share work with the team that needed work. I mean, that just almost never happened there. And so you know, that led to just think about the business consequences of that, right, higher overtime costs, and poor use. So you know, the team that was very was paying a bunch of unnecessary overtime costs, burning up their people, the team that needed work, you know, they were losing money, because they were they were paying wages, and they weren't, you know, the team wasn't billable. So there's low utilization, or they were cutting hours or sending people home and risking risking the loss of good employees. So that's just one example. There's all kinds of other examples of the really bad consequences of that system that they had designed. Sorry, I'm trying not to bump my microphone. So, you know, the way they chose to organize teams there and evaluate teams, was a large, I think, contributing factor factor to their toxic culture. And I think there was a recognition of that at the executive management level. So evaluating performance is very important, right? And that's something that we try to do here at my company, we'll do a separate episode, I hope on how we how we evaluate individual performance. That's not what we're talking about today, though, we're talking about how we evaluate team importance. So why is that? Why is that so important? It's important because most of our work now in the modern economy is done as teams. So we were you know, we're not individual craftsmen, you know, you don't go see an individual blacksmith or wagon. Right, or, you know, seamstress, we work we work in teams, almost always in our economy. The other reason, I'll turn out to say I'm okay, too much working on my word whiskers. The other reason that's important teamwork is important is because, you know, you throw a group of star players together on a field, that does not make a superstar team. So successful team building is a lot more than just getting talented people and put them in the same room. That's something that's become more and more clear to me as, as I've gotten older. So you know, the composition of the team, the mix of personalities, the team chemistry, the rules that the team operates under, those are all really critical things to whether or not a team is going to be successful. And now I'm not a sports fan, I'll just tell you, I'm not I don't watch a lot of sports. But I think if you're a sports fan, you will know that there are teams of star players that often lose to teams of maybe less talented players still talented, but less not superstars, but because they have good team chemistry and good training. And good teamwork that you know, that team of less skilled players can be a team of superstars. And so I think the same thing applies in business as well. So we're going to do two things in this episode and has two main main parts. The first thing we're going to do is we're going to review the main points in that article from The Economist. I'm going to read you a little snippet of that here in a minute. And then we're going to just talk a little bit about how those principles are apply or or operated my business might I keep saying my business, our business, the company, I worked at reifying horizons on just one person in that team. So we'll talk a little bit about how we evaluate teams at our age, a lot of room for improvement there. So how we organize and evaluate teams. Okay, so part one, let's get into that. That's just kind of a review of the main points in this article from The Economist magazine. And so the title of the article is the collaboration conundrum. It's in the Bartleby column. As I mentioned, this was in the it's in the November it's either the sixth or the 11th. I'm not sure. issue of the magazine. And so what I want to do right now is just read you the opening paragraph from the article. So I'm going to do that it says and I quote, There is no I in team but there is one in autopilot. Despite the growing importance of teamwork and organizations, the processes used to manage employees have carried on much as before, bosses may wax lyrical about collaboration, but the way they reward review and recruit has not caught up, man, what a great opening paragraph, right. And I really liked this column. And it's, they're a little snarky, and I appreciate that they have a little bit of a dry sense of humor some of that may have come through. So that's the opening paragraph to the article. So what is the what are the main points, it's a short article, it's only half a page. So one of the things they mentioned teamwork is growing in importance to the success of the organization's they give some reasons why that is. One is technology is made the sharing of ideas, and information easier. Another is hybrid work and remote work has made that sharing of ideas and information more and more important to getting work done. The software industry, especially in Silicon Valley, as you know, kind of spread the gospel of agile teams and teamwork. So other types of businesses are paying more attention to that now. Without a doubt, teams are better at solving complex problems. You know, one of the things I love about working at redefined Horizons is I've got really smart people working for me, both at my level in the organization and below me, and we are so much better at solving problems, hard problems of internal problems and problems for our client than I would ever be on my own. And I so rewarding. I really love that. So that's important. And then, you know, the other thing is, if you're worried about employee retention and employee satisfaction, you know, people have a strong attachment to their teams or workers, you know, oftentimes a more have a stronger attachment to their team, and they do the actual organization they work for. That's why sometimes in the design industry, you will see teams move, follow a leader from one company to another, I have certainly done that with some members of my team. I've taken teams from one employer to another. So yeah, there's there's some emotional attachment there to the team. Now the article brings out despite all those reasons why teamwork is important and getting more important. There's a contradiction, right? What's the contradiction? Well, management practices still focus on individuals, rather than teams. So we tend to evaluate the performance of individuals, not the performance of teams. So when I say, management practices, what am I talking about? They identify three in the article, I'm going to call them the three R's. They're not called out in the article. But so what are the three R's, recruiting, reviews, and rewards? So let's talk about that recruitment. That's just, you know, when we go to hire people, for our, for our companies, we tend to focus on their achievement, or achievements, and skills as individuals, rather than what they've achieved in the groups they've been a part of, I think that's very, very true. When we review people's performance, or evaluate, we usually do that at the individual level, we do that at the team level. And even when we think we're doing it at the team level, we might still be doing it at the individual level. And that big civil engineering company I gave was an example. You know, they thought they were rewarding T performance. And what they were really rewarding was the performance of a team leader. Right. And in that case, their focus was too, too tight, right, they had focused on teams that were too small. And then that part of that was what led to the inefficiencies that we talked about. We also tend to measure performance based on concrete outputs, rather than soft skills that are important to teamwork. Man, that is so true. I don't know that I've ever worked in an organization that has done a good job of evaluating stop soft skills. You know, typically, when you're working in a, in a professional consulting or design firm, they're looking at your utilization rate, you know, what percentage of your time is billable? They're looking at, you know, are your projects coming in on budget? Those are the two main metrics, you know, are both very hard numbers that are easy to measure and have nothing to do with what kind of what kind of team player you aren't for sure. And then the third thing rewards. So that's things like bonuses and promotions, you know, those are typically given on an individual level, based on individual performance. You know, most companies don't do a great job of rewarding teams. The last thing that they talk about in the article is you know, most managers don't understand what the people on their teams do. That is mind blowing to me, because I work for a small company, but I can understand why that is. So they just have a statistic in the article that I thought was interesting. They said on average. The managers that were polled in a one in a particular survey didn't or couldn't recall what 68% Of the people on their teams did, like what their core job function or day to day activities work. That's so huge number 68%. So we don't have that problem at redefined horizons. But everybody on my team does have But I can see how as your team gets bigger and your organization gets bigger, that becomes more and more of a problem. Now, one thing I like about the columnist is they're there. They try to be balanced and realistic. So they say, Hey, we, you know, the columnist is they understand that there are some major challenges for organizations that want to shift some of their focus from evaluating individuals to the performance of individuals to evaluating the performance of teams. So why, why is that hard? What are the challenges? Now, just because it's hard, doesn't mean you should try. But there's recognition from the colonists that this is difficult. So what are some reasons why it's difficult. The columnist mentions a few in the article of one is people move jobs and make career advancement as individuals, not as groups. And when you look at somebody's resume, most of that is focused on what they've done as an individual, not what they've done as a team. The other challenge is when you start to reward team performance, instead of individual performance that can lead to unfairness, right, it can lead to freeriding, potentially, so you have to consider that. And then it's also more of a challenge to measure team performance, right. So you don't have a concrete number like utilization rate. It's difficult to measure how individual people are contributing to a team effort. So those are all challenges. But in the article, they talked about, hey, we think those challenges can be overcome. You know, when you're recruiting, you can assess for traits or characteristics that are responsible for team success. If you put some effort into that, when you review performance, you can collect and use input from team members. They didn't mention this an article, but one of the things I've I've tried is, when you have a person that doesn't seem to be performing well, you can try switching them to a new team to see if the team dynamics, the new team dynamics make a difference. Sometimes you've got a person that just doesn't work well with others. And so you can track two or three different teams. And if they can't work on any of those teams, that may be an indication that there's a problem there with the person with the team dynamics. And then on the rewards, one of the things, couple things you can do to try to address some of those challenges is just keep in mind that when you reward team performance, it will probably lead to better outcomes for the organization in your clients, then rewarding individual performance. And if you have that kind of system set up, it's going to attract the right kind of the right kind of person to your organization, you know, you if your your your incentives, or your rewards are based on well functioning teams, and you're upfront about that in the in the recruiting process, you're going to tend to attract people that like teamwork, because they know that's how they're going to be rewarded. Alright, so the second part of the episode is a little more challenging. And that's where we're going to talk about how, you know, how are we trying to apply this at my, our company where I work redefined, rises. So I'll tell you, we have lots of room to improve here. And that's part of the reason why I enjoyed the article so much was because it gave me a lot to think about, I haven't finished thinking about this, I need to I need to chew on it a lot more. That's one of the reasons why I wanted to do the podcast episode. So we have a lot of room to improve. One of the things that's changed for us in the last couple of years is we now have nothing employees to support multiple small teams, you know, back when it was just me and Danny, and in Austin or Elena, that wasn't really an issue, we were one team for everything. Now we're large enough, you know, we're getting to be somewhere between 12 and 15 people. And so we can have small teams, different small teams that are made up of different individuals. So I need to start to think about this more as a manager as a managing principal. So let's talk a little bit about I want to talk about how we how we form teams here, how we structure teams, and then you know, how we evaluate reward team performance. So the process we use to form teams right now is pretty informal. And that works well for us. I think right now, because we're small, and all three principals have a pretty good idea of what's going on in the organization. But that's something we need to think about as we grow, we may need to formalize that process a little bit. Maybe not even formalized, but just be more deliberate about it. I think a lot of how it happens right now is just kind of organic and ad hoc. So we have four main types of teams here. four main types of teams that redefine horizons. So we have what are called job teams. So those are those are people that are working together on a particular job. That's usually fairly small. So it's somewhere between three to five people, depending on depending on the job. We have client teams. So those are individuals that work together to serve the needs of the same client on multiple projects. We didn't do a lot of that our first couple of years because most of our work was was transactional, but now we have some long term clients and so client I teams are a very real thing here. Now we have, I don't know, I want to say maybe four client teams. So those are people that address the needs of a client, not not a specific job. Then we have just some what I call informal teams. So that's like our field surveyors or an informal team, I have my business support staff is an informal team, we kind of have a group of people that work on human resources, we have a group of people that work on, you know, the financials, the bookkeeping. And it's kind of funny when I was thinking about what informal teams we had, you know, that I can kind of see that structure emerge organically in the way we organize our chats on Microsoft Teams. So it's very, I say, informal, because it's very much not structured, right? These are just kind of groups that emerge, given given the tasks that they're assigned or working on. And then one of the things we've done pretty recently, so this is the last year or two, just because I'm a Business geek, and I like to run experiments on my, on my poor people is we we've tried to do something we call aspect teams, which is where we tried to take informal teams and make them a little more formal. So right now we basically have two aspect teams that I think function fairly well. That's the CAD management team and the record a survey map team that we have here. So those teams meet on a semi regular basis, and have pretty well defined scope of responsibility and and a set member list. Now I need to do a better job of managing our aspect teams. That's that's on my list to use. So what are we doing a good job of I told you, there's a lot of room for improvement. Let me let me give some credit where credit's due, let me talk about four things we're doing a good job of so we don't hire jerks here, we're really good at that. We're pretty good at identifying those people in the interview process. Not only that, but we tend to hire people that are referred to us. We don't hire off the street, almost never. But we're pretty good about about we now jerks, if you're a jerk, either don't make it through the interview process, or you don't last very long here. And so that's good witness so that we tend to hire people that work well on teams. We do. Number two, we do make an effort to recognize team success, I think. Now, I will tell you right now, that is mostly informal. So we don't do that on a formal basis or a concrete basis. And that's part of what I need to think about. But I know that I personally as a, as a managing principal make an effort to think in in recognize our teams when they do well. But that that could certainly be more deliberate and formal. As I mentioned, we've started experimenting with aspect teams, right. And aspect teams are just basically a way to take an informal team and add some structure, I need to do a better job of managing the kind of two active aspect teams we have. And then taking a couple of those informal teams and making them making them more formal via aspect teams. So I need to think about that more, and I need to do a better job of it. And then we do a good job, I believe. So this is number four, we do a good job of selecting teams, for our job teams, we do a good job of selecting people for our job teams and our client teams. So those teams are are pretty stable, they don't see a lot of change. So when we get a group of people together to work on a job or team, that group doesn't change frequently. So those teams are stable. And we've done it, you know, we know who works well together. We know as you know, we have a pretty good idea of who has complementary skills. And so I think we do think we do a pretty good job of team composition. Now part of that's because we're still fairly small and I have a good understanding, you know, my my partners and I have a good understanding or, excuse me, all of our employees. So I can I know why that would get harder as an organization grows. So what are some things we can do better on I have some goals here, what are some things that that my team could do better on when it comes to the way we structure teams and the way we evaluate team performance? I think we need to do a better job of evaluating soft skills. I've made some baby steps on that with my human resources. specialist is also my wife. So we're trying to rejigger the interview process a little bit and assess some more that and I'm also thinking about how we incorporate soft skills now into into what we call our monthly look ahead it's in our annual reviews but I need to think some more about it you know we don't do a good job right now getting feedback team feedback you know, feedback from team members on on how the other people on their team work together. So I needed I needed certainly give that some more thought. You know, I need a better understanding of just team dynamics. That's something I need to learn more about. I've got a couple books that I want to read about that. business books, but you know, just understanding things like hierarchy The way people seek status, help different personalities work together. Again, I made some baby steps here. You know, so I kind of geek out on like personality tests and the different types of personalities. So I'll try to remember to put this in the show notes. But there's a cool website I like called 16 personalities. And I've had some of my people take that test, and I'm trying to learn more about how different personalities work together. We have a pretty, pretty flat structure here. So we're not huge on job titles, and pecking orders. I think, as I've gotten older and run the company for a few years, I realized that's more important to other people than it is to me, and maybe I can't completely ignore that. They struggle with that a little bit. You know, I don't, I don't. I'm not a big fan of people that fascinate on job titles and hierarchy. But I understand people do get a check, you know, there is some level of emotional attachment to that. Man, I need to, I need to give some more thought to how I find that balance, right? Like, I want to run a flat organization and have people that are willing to do any task that's assigned to them, at least on a short term basis. But I also want to recognize that people do care about their status, and you know, their job title. So I gotta get that some more thought I don't, I don't have good answers to all that yet. And you know, I need to talk to my partners about it more. So that's an area that I need to that I need to work on personally, just, you know, better understanding of team dynamics. And some of those issues that come with team dynamics, like I talked about, I want to shift some more of our informal teams to formal aspect teams, I think that'll get more important as we grow as an organization. And then the last thing, and this is kind of the whole point of the article that was in economist is, I just need to think about how we evaluate rewards and performance. We have a good system for that yet. So I want to think about, you know, how we can introduce that. And I don't know if it'll work for an organization as small as we are, but I want to think about it, maybe we'll run some little experiments to try it out. You know, I don't want to do with the giant engineering firm, that I talked about at the beginning of the podcast, and set up a really bad incentive structure infrastructure that, that encourages bad behavior, and won't do that. But I can, you know, so I want to think a little bit more about how I can incentivize, incentivize team performance and good teamwork. And I don't know, maybe those are monetary incentives, maybe they're not, I gotta, I gotta consider that talk to my partners about. Alright, so in review, what did we talk about today, five main points that we covered. Number one, teamwork is growing importance and importance, talked about some of the reasons why that is. Number two, there's this contradiction that we see between the growing importance of teamwork. And our current management practices, right, they tend to focus on the individual and not on teams. We talked about the three R's, right, retention, I'm sorry, recruiting, recruiting, retention and rewards, I think were the three R's. And how they, how they apply to individuals and teams, we talked about the challenges in shifting some of your, your evaluation of performance as an organization, from individuals to teams, and how you might overcome some of those challenges. And then the last part of the episode, the second main part, we talked about how we currently form teams at our age, the four types of teams we have, and some goals that I personally have as a managing principal, on how we can do better about the way we structure teams, evaluate team performance, and and reward teams. So some things, some things I'd like to talk about in future episodes, you know, or or I'd like to talk a little bit more about those team dynamics we mentioned, you know, which kind of personalities work well together? What's the appropriate level of status or pecking order? You know, how do you how do you create an organization with a relatively flat structured structure? You know, when is it important that teams can form and reform quickly? When is it more important to have stable teams? So I'd like to talk about about that more, I'd like to talk more about just, you know, what's the process that you use as a business owner owner to form and manage teams in a small surveying or mapping organization? So lots of interesting things there. I got some breathing to do I get some more books to read more articles to read. If you know of a great podcast about teamwork in business or just teamwork in the wider world, please let me know you can post it in the comments on YouTube or shoot me an email or or text, that'd be great. So what are we going to talk about in the next episode? That would be episode number seven. We're going to talk about strategy. So strategy versus tactics and business planning for your mapping organization. I have actually scripted part of that and realize that's probably enough for two episodes 30 to 40 minutes. So I think we're going to break it into two parts. What I'm going to do in the first part is just kind of go over some of the concepts. There's a really cool, really cool article from Harvard Business Review that we're going to talk about. It's such a great article that I'm not going to cover the whole article, I'm just going to cover about the first half, but so it'll be similar episode to this one. And then the second part of that, so the second episode on that topic is we're actually going to go in and look at a strategic plan. That's one of the things I've been working on last year, and this year is getting some strategic plans done both for refined horizons and for some other organizations that I'm involved with on a volunteer basis. So we'll look at kind of an outline of come up with for strategic plan, and maybe we'll even work through a theoretical strategic plan. I haven't decided yet, but that'll actually be interesting. So look forward to that. I hope you guys enjoyed episode number six. And I hope that you enjoyed this format. Let me know give me some feedback on that. If you guys liked it, we'll do some more of these where we take a dive into it to an article or a book chapter on business. So thank you guys for listening. Appreciate it.