Mistakes Companies Make when End-of-Year Approaches

About this time of year, leaders and managers begin the ritual, asking themselves, “Have I met my goals for the year? Have I spent my 2014 budget? Am I prepared to declare my needs and wants for the coming year?” The end-of-year flurry of activity is not necessarily something we do to ourselves; it is historically how business is done each year.

The practices and processes we go through are just part of the annual cycle, causing added stress and unnecessary distractions. The following four end-of-year mistakes can be turned around, with a little help from the science of behavior. Learn what is wrong with these four practices and what you should do instead to maximize your opportunity for success.

1. Spending Unused Budgets: We’ve all seen the game played before—if you don’t use it, you will lose it. This mentality causes people to spend what was given to them so they can ask for the same, or more, for next year. You never know what you might need, right? Wrong! Organizations make the mistake of continuing this wasteful cycle instead of rewarding those who spend less than what is given to them. When reviewing and determining budgets for the coming year, take a different approach. Create a priority list of the budget dollars needed for the most critical tasks to meet your targets. Then assign dollars based on the top few priorities and review in a month or two to check progress. If the team does better than expected, buying equipment they’ve requested that was not in the budget or securing other resources to help them do their jobs better can be quite reinforcing. When you build in reinforcement for saving money, while still meeting all key measures, you will be amazed at what can be accomplished.
2.  Giving Bonuses Across-the-Board: Who could blame you, you’ve been given $X amount of dollars to distribute to your team. The easiest approach to save time and money is to split it across the board to your team members. What many don’t realize is that these decisions can inadvertently create problems by punishing those who give above and beyond performance and rewarding those who have done little to contribute to the outcomes. Instead, decisions of pay or other rewards should be based on individual contributions. When people are positively reinforced for their specific contributions they will be more likely to work harder than those who lag behind and give just enough. This practice will, over time, decrease performance of the bad performers, but surprising to many, it will also decrease the performance of the good as well. Positively reinforce behaviors that are valuable whenever you see them, not just at the end of the year.
3.  Treating End-of-Year like an event: It may not officially be marked on the calendar but all of the activity surrounding year-end makes it seem like a critical time. Salespeople, for example, are very aware of end-of-year, particularly as it pertains to meeting and exceeding sales quotas. If they are having a stellar year, why wouldn’t they hold off some of their late year sales until next year? The problem with this is that it detracts from the company’s bottom line. When organizations are managed in this way, they are reinforcing the wrong behavior. While accounting needs to have monthly, quarterly, and annual reports, there is nothing that dictates that employees need to be managed by the calendar and not by accomplishments whenever they occur.
4. Telling employees their goals for the next year: It is no wonder that engagement levels are around 20% in the American workplace. When managers make all the decisions, telling employees not only what to do but how it must be done, where is the opportunity for engagement? Under such conditions, work becomes just a job. Command and control is old school. The new way is collaborative—rather than telling employees what has to be done, ask employees for their ideas and input. Managers and supervisors have the job of helping employees to be successful. This implies that they are in control of accomplishments. Employees are not in control when they are told what to do and how to do it. Increase asking for help in reaching goals and solving problems. The supervisor’s role is to coach, not tell. For a good model of how it was done in the Navy read, Turn the Ship Around by David Marquet.

Yes, the end-of-year is coming, but it doesn't deserve the hectic attention it gets. Manage differently; and start by turning these four mistakes around.