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PerformanceManagementAGuidetoConsultingJune2000DiscussionObjectivesProvideanoverviewofcurrentthinkingandtrendsDiscusswhatPMconsultingisallaboutReview“whatworksandwhatdoesn’t”ShareBestPracticesresearchReviewsomeofthebasicplanningandprojectstepsGroupDiscussionAnswerthefollowingquestions:1.Whatisperformancemanagement?Whydocompanieshavethisprocess?2.Whydoesn’titworksowell?Whatmakesitsodifficult?PerformanceManagementTranslatesbusinessvisionandstrategyinanactionablewaybycascadinggoalsthroughouttheorganizationMeasuresbothwhatisdoneand
howitisdoneAlignsDepartmentgoalswithstrategicbusinessobjectivesAlignsindividualswiththebroaderorganizational/teamcontextEnsurestheclosest“l(fā)ineofsight”possibleSource:WatsonWyattBestPracticesinPerformanceManagementPerformanceConsulting1.TotalOrganizationCascadingandAlignmentStakeholderMetrics2.EmployeeReviewProcessEngagementandAccountabilityGrowthandAchievementsTwodimensions:PerformanceConsultingTotalOrganizationPerformanceCascadingandAlignmentStakeholderMetricsTheKeyQuestionsofBusinessPlanningWhydoesthecompanyexist?Whereisitgoing?Size SalesMarkets LocationsProducts CompetitiveChallengesSBULinkagesHowwillitgetdone?ValuesandOperatingPrinciples TechnologyResourcesWhatmustthecompanybeverygoodatdoing?Howwillprogressandsuccessbemeasured?ExpectationsofStakeholdersCompanyPerformanceMissionVisionofFutureStrategicOrganizationalGoalsCoreOrganizationalCapabilitiesBalancedScorecardBusinessPlansareDevelopedbytheBusinessUnitsResourceRequirementsIndustryLatinAmericaAsia(Europe)ObjectivesofthebusinessunitObjectivesoftheregionBottom-up-approach:Derivationofsegmentandcorporatestrategicplansandoperatingobjectivesfrombusinessunitgoals.Top-down-approach:DerivationofobjectivesfromcorporatestrategyObjectivesofdepartmentsandindividualsStrategyoftheCorporationObjectivesofthecorporation
PeopleFacilities
TechnologyEquipmentandMachinery Componentsofa
BalancedScorecard
(withsamplemetrics)FINANCIALRESULTSCUSTOMERSATISFACTION
BUSINESSPROCESSES
LEARNING&GROWTH
AFYPROI/ROASurplusGrowthNewsales:newcustomersAdditionalpolicies:currentcustomersMarketshareCollectingpremiumsCalculatingsellingprice:newproductNewlicensing(Region&Corporate)EstablishingtheBusinessCasefornewventures,newlocationsProductDevelopment:#innovations
CompetencygrowthAdditionalcountriesCorecapabilitiesgrowthCascadingStrategic&OperatingPlanGoalsCORPORATEORGANIZATIONMETRICSFinanceFinanceCustomerCustomerBusinessProcessBusinessProcessLearning&GrowthLearning&GrowthBUSINESSUNITTEAMS/INDIVIDUALSDEPARTMENTBalancedScorecardscanprovideorganizationalignmentandaccountability5to7GOALS“SMART”parametersDirectlyalignedTypicalProjectTimeline&Milestones**8weekselapsedtimefromplanningsession2DaysClarifyCompanyStrategyanddeterminegoalsImplementationTrainingandRolloutbeginsImplementationPlanningWorkshopFormalAdvisoryGroupReviewSession&Follow-up1wk2wks1wk1wk1wk1wk1wkProjectPlanning,OrientationandKick-off1Day1DayInterviewFindingsDevelopMeasureRecommendations1DayWorkshoponTargetsFinalizeTargetRecommendationsImplementationPlanReviewReviewPlanforImplementationReviewTransitionStrategy2DaysFormalAdvisoryTeamReview1Day1Day1wk1DayExecutivePlanningSession(s)PerformanceConsultingTotalOrganizationPerformanceClients:CEO,COO,sometimestheVPHRFees:typicalprojectis$180-250KTimeframe:+/-4monthsPerformanceConsultingEmployeeReviewProcessEngagementandAccountabilityClearPerformanceExpectationsGrowthandAchievementsPerformanceManagementIs......theongoingprocessofsettingperformanceexpectations,providingfeedbackandcoachingtoreachthoseexpectations,andreviewingandrecognizingperformanceresults.TiePMtotheBusinessCycleReviewandPlanningPlanningFeedback&CoachingFeedback&CoachingMid-YearReviewNewYearPlanningYear-EndReviewBadtiming...“Idon’’twanttoruinyourdayHerman,buttomorrowmorningyou’’rescheduledtobeinmyofficeforyourannualperformancereview...””RememberTheKeyQuestions?Whydoesthecompanyexist?Whereisitgoing?SizeSalesMarketsLocationsProductsCompetitiveChallengesSBULinkagesHowwillitgetdone?ValuesandOperatingPrinciplesTechnologyResourcesWhatmustthecompanybeverygoodatdoing?Howwillprogressandsuccessbemeasured?ExpectationsofStakeholdersCompanyPerformanceMissionVisionofFutureStrategicOrganizationalGoalsCoreOrganizationalCapabilitiesBalancedScorecardOrganizationAlignmentleadstoEmployeeEngagementCOMPANYMISSIONVISIONStrategicObjectivesCoreCapabilitiesCompetenciesLeadershipFunctionalDepartmentScorecardSuccessProfilesEmployeePerformanceProcessIndividualGoalsEmployeeDevelopmentPlansBusinessUnitScorecardCascading:CriticalMetricsandCompetenciesChangerequiresabalancedValueExchangeEmployeeGivesEmployerGivesEnergyEffortCommitmentValueAddLearningTimeOpportunityCareerBenefitsCompensationJobThePerformanceProcesscanprovidethekeystodevelopmentBasePayPromotionTrainingCareerdevelopmentSuccessionplanning89%77%56%51%32%Reductioninforce26%Variablepay34%CurrentUseofPerformanceManagementDataSource:WatsonWyattBestPracticesinPerformanceManagementPerformanceManagementEvolutionTraditionalRecentEmergingMeasuresTraits/OutcomesBehaviors/OutcomesTime/Quality/ValueEvaluatorBossSelf/PeersCustomersOutcomesMeritPayDevelopmentOrganizationSuccessImplementationDistributeFormsTrainandCommunicateOngoingEducationandinvolvementOwnershipHRDManagementEmployeesComplianceVoluntaryMandatoryMotivationFactorsThatInfluenceProcesseffectivenessOrganizationSupervisorPMCultureSkillsProcessTheOrganizationValuesthatSupportPMTheCapabilitytoMeasureandDiscussPerformanceTheInteractionBetweentheEmployeeandtheSupervisorPeopleFactorsTechnicalFactorsPerformanceMeasuresRewardsDeliveryPMFormsMeasuresthatSupporttheOrganizationsGoalsandValuesandarePossibletoAccuratelyMeasureHowandWhyPayisLinkedtoPerformanceHowtheDesignoftheFormSupportstheProcessPerformanceManagementEffectivenessFeedbackfrommultiplesourcesCoachingandfeedbackareintegralDe-emphasisonaratingDecentralizedcontrolGreaterlinkagebetweenpayandperformanceEffectivemeasures-Competencies-Businessstrategies“Champions””—sponsorshipEmployeeparticipationEmployeeinvolvementinsystemdesignCommunication&trainingAlignmentwithbusinessobjectives,strategy,customerneedsOngoingmonitoringofeffectivenessofprogramBestPracticesElementsofSuccessfulProgramsHighImpactPerformanceManagementKeyelementsfoundinall“bestpractices”EmphasisonlookingforwardPlanninganddevelopmentJointprocesswithemployeeownershipCooperativegoalsettingFeedback(continuous,multiplesources)DevelopmentalfocusPayandperformancelinkageSource:WatsonWyattBestPracticesinPerformanceManagementUseofKeyElementsDevelopmentPlanningMulti-sourceratings14%65%81%84%94%97%GoalSettingTeamstandardsNoratingsCompetencies/behaviorsSource:WatsonWyattBestPracticesinPerformanceManagementEvolutionofPerformanceFeedbackTopDownSelf-AppraisalPeerReviewsUpwardFeedbackInternalCustomersExternalCustomers3600ReviewDoesitmakeadifference?Employeesareeligibleforstockplanprograms1.8%Companyterminatesemployeeswhoperformunacceptably1.8%Companydoesagoodjobofhelpingpoorperformersimprove1.5%Topperformersgetsignificantlymorepaythanaverageperformers0.8%Companypositionspayabovemarket0.4%Employeeperformanceappraisalsusedtosetpay0.4%Employeesparticipateinprofit-sharingplanbasedonfirm’soverallsuccess0.6%Payislinkedtocompany’’sbusinessstrategyThePerformanceMatrixOResults“what”Behaviors“how””Std=100%ofexpectedStd=100%alignmentNIHNIWFMEEKey:O=OutstandingEE=ExceedsExpectationsM=MeetsExpectations(80-90%ofpopulation)NIH=NeedsImprovementon“HOW””NIW=NeedsImprovementon“WHAT”F=FailingProjectStepsProjectPlanning,EducationandAssessment:ClientFirst,scopeandtimetable,designteameducation,PMdesignmatrix,documentreview,interviewsDesign:Straw-mandesigns,implementationplanningandscheduleTestingandApproval:Presentation,seniormanagementassessment,sign-off,editImplement:Communicationrollout,modulartrainingrollout,useReview/Revise:Gatherfeedback,testandrevise12345PerformanceConsultingEmployeeReviewProcessClients:VPHR,Dir.Compand/orODFees:typicalprojectis$85-130KTimeframe:+/-3months(excludesimplementation)Think…““Implementation””Asuccessfulprocessis25%designand75%implementation!“It’snevertoearlytothinkaboutimplementation...”PeterDruckerBestPracticesinImplementationDetailedcommunicationsandtrainingstrategyPro-activeproblemidentificationBroadbuy-inSeniormanagementinvolvementMeasurementofsystemeffectivenessSource:WatsonWyattBestPracticesinPerformanceManagementUtilizeBestPracticesinChangeManagementVisibleseniormanagementsupportOngoingcommunicationBestpracticesandstakeholderresearchHighinvolvementandbroadbuy-inCarefulplanning,rapidprocessComprehensiveapproachtoimplementationandmonitoringTraininginintactworkteamsSource:WatsonWyattHR21StudyUnderstanding
Realizehow“mywork”isdifferentbecauseofthechangeCommitment
Believeinthesystemandprocessforchange...insharedaccountabilityformakingitsuccessfulAcceptanceAgreetovalueormeritofchange.Recognizeadvantageof“futurestate”Action
Adoptnewbehaviors=becomeengagedinthechangeprocess.ChampionchangesinternallyBehaviorChangeModelEFFORTAwarenessAQuickSummaryPerformancemanagementcontinuestoevolveNOoneperfect
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