© 2006 hay group llc. all rights reserved performance management: avoiding misalignment between...

© 2006 Hay Group LLC. All Rights Reserved

Performance Management: avoiding misalignment between employee behaviour & critical business goalsGennady PolonskyHay Group HR Committee Conference,American Chamber of CommerceOctober 13, 2006


2 Why Performance Management?

Consulting experience tells us that nothing really can be accomplished in the long run without HRM

HR requires well established process

Well established process is not good enough

PM is a combination of ‘the process and a heart’


3 World wide leader in human resources consulting

Headquarters in Philadelphia, USA 85 offices in 47 countries 2500 consultants Hay Group is a global consulting firm that works with

leaders transform strategy into reality. We develop talent, organise people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organisations realise their potential

47 countries/85 cities

Established inPhiladelphia in 1943


4

Pay People Organisation

Solution Consulting

(tailor made)

Top Executive pay

LTI

Leadership Development

Executive Development

Coaching

M&A

Change management

Systems Consulting

Job Evaluation System

Salary Management

Grading, Job Mapping,

Job Family Modeling

Competency Models

Performance management

Talent management

Assessment Centres

BPR

On demand Consulting

(off Shelf)

RIS

Market data collection Capability Assessment

Employee surveys

Job Description

Strategic Positioning of Hay Group Russia


Performance Management:

Alignment business goals and employee behaviour


6 What is Performance Management ?:

Performance Management is a process of aligning or integration organisational and individual objectives to achieve organisational effectiveness, with development as a prime purpose

Armstrong and Baron, (1998)

The key aims of PM are to measure effectiveness, identify training needs and promote motivation through feedback

Lowry, (2002)


7 Performance Management according to Hay Group is:

a continuous process of

planning,

coaching,

appraisal, and

reward,

focussed on improving business performance through performance of employees.

a view and a way of managing that encourages successful performance.


8 Performance Management

Planning

Appraisal

CoachingReward

Strategy

Managementskills

Critical Success Factors

Department, Sector or Unit targets

HOW

Organization:business planning

WHAT

Individual objectives

Employee: performance planning


9Why would companies want to implement Performance Management?

Top management

wants to:

Managers want to:

Employees want to:

effectively implement and realize strategy

stay informed about results in a changing organization

link strategy and reward realize intermediate and annual targets

have the right people for the right jobs

make optimal use of in-house talent

coach people and talk to them about their results

possibility of differentiating between good and poor performance

know what they are expected to achieve

have some influence on the targets to be achieved

know about their contribution to the success of the organization

have room for managing their own work

look for development opportunities in areas which they are interested in and in which they can actually accomplish things

be acknowledged/rewarded for good performance


10 The “hard” and “soft” sides of PM

Aware of need Create enthusiasm

Understand processes

and systemsAble to apply

Integrated in management practice

Drive to apply


11 Critical issues in building a PM culture

Leadership of management, “taking it seriously”– management should be capable of executing the PM process

– supportive work culture

Linking strategy to measures – pay for performance can be seen as a visible aspect of linking

strategy to measures

Commitment of the top

Active employee participation


Performance Management cycle


13 Performance management cycle

Planning

Appraisal

CoachingRewardManagement skills

& Attitude

Employee: performance planning Which results are agreed on

with the employee?

Which support is required?

To which extent are agreed results achieved?

How will realised results be rewarded?


14 Planning

Purpose

Results

Topics for discussion

Time frame

Meeting parameters

reaching agreements for the coming year (results and methods)

explaining consequences

reaching agreements

relationship organisation targets / job description / individual targets

means/tools necessary external influences

future

discussion and negotiation


15 Establishing result agreements

Job (cluster) description

‘Standard’ Result agreements

Department Objectives

(BSC)

Competency profile

PersonalResult agreements


16

Coaching is giving the floor to someone’s potential that he/she may perform as good as possible

Coaching

Definition

It is not teaching, but helping people to improve


17 Coaching

Purpose

Results


Time frame

Meeting parameters

analysing / steering progress connecting organisation and individual targets

specific plans for professional adjustments (coaching, actions, means)

progress based on interim analyses reasons for deviation adjustment (actions to be taken over the next six

months) addressing strong/weak points

past and future

discussion

Management skills

Planning

Appraisal

CoachingReward

The Performance Management cycle


18 Appraisal / Reward

Purpose

Results


Time frame

Meeting parameters

Reward consequences

evaluation of results and behaviour/methods discussing final appraisal of results and

behaviour/methods discussing reward consequences

determining final appraisal / reward consequences

discussing all agreements made discussing final appraisal evaluation of strong/weak points actions agreed upon: the state of affairs actions for the coming year

past

announcement and clarification by the manager

yes

Management skills

Planning

Appraisal

CoachingReward

The Performance Management cycle


19 Appraisal: not a one time per year event

“A leader should be constructing his appraisal all year long and giving his appraisal all year long. You have 20, 30, 60 opportunities a year to share your observations. If, at the end of the year, someone is truly surprised by what you have to say, that is a failure of leadership… By failing to provide honest feedback, leaders cheat their people by depriving them of the information that they need to improve…. Critical feedback is the “heavy lifting” of leadership”.

Dick Brown, CEO and Chairman of the Board, EDS


20 Best Practices—Managing PerformancePlanning Coaching Reviewing Rewarding

Performance planning is a core business process

Translates strategic intent into understood goals/actions

All aspects of performance are considered

Objectives include behaviors in addition to results

Employees play a strong role in the performance planning process

Obstacles to good performance are identified and dealt with

Managers are selected for and held accountable for effective coaching

Managers and employees are trained in and good at coaching

Modeling of coaching behaviors is critical (this includes the executive levels)

Managers create the climate for superior performance

Interim reviews are done (formally)

Coaching interventions are frequent and focused (less formal)

Initial self-assessment is critical

Open, two-way communication is critical

Discussions include both performance evaluation and development opportunities

The role of Human Resources is value-added vs. controlling

No more than a four-point rating scale is necessary

People are rewarded for results

Salary discussion is separate from performance/development discussion

Increased clarity regarding how performance is rewarded

Distinctive rewards for different aspects

Use of both monetary and non- monetary rewards

Understanding what good performance is

Ensuring good performance

Assessing how good/poor performance was

Reinforcing good performance

• Identify what

• Clarify how

• Commit

• Monitor

• Give feedback

• Get feedback

• Summarize total performance

• Rate performance

• Strategize for improved performance

• Apply a broad spectrum ofrewards in a focused way

• Act on feedback

• Build self-esteemand capability


Leadership, climate and PM


22 Great leaders:

create a great atmosphere to work in don’t have one style of leadership; they have several and they

know when to use the appropriate style understand their behaviors and inner drives know exactly what their role is in the team


23 Organizational Climate

Climate is people’s perception of how it feels to work here. It entails aspects of the environment that directly impact

employees’ ability to do their job well. Culture exists at a higher organizational level and is more

difficult for one leader to affect.

LeadershipCompetencies


LeadershipStyle

LeadershipStyle

JobRequirementsJobRequirements

OrganizationalClimateOrganizationalClimate

LeadershipLeadershipEffectivenessEffectiveness


24 More engaged employees through a positive climate

Great leaders achieve 20 to 30% more discretionary effort from their people because they create a positive Organizational Climate which means people are…

More engaged

More innovative, creative, and focused

- Harvard University


25


LeadershipStyle

JobRequirements

OrganizationalClimate

LeadershipLeadershipEffectivenessEffectiveness

Leaders have a large influence on organization climate and thus on the business performance

BusinessBusinessPerformancePerformance30%30%70%70%

Business context


26

“The capacity for recognizing our own feelings

and those of others, for motivating ourselves, for managing emotions

well in ourselves and in our relationships.”

What is Emotional Intelligence?


Hay Group Performance Game


Conclusion


29 How to build a Performance Management Culture?

Incorporating PM into day-to-day management– e.g. regularly coaching staff to attain performance objectives

Improving support available to management in the PM process– e.g. coaching and training

Measuring targets that are clearly linked to business objectives and priorities of the individual

Improving a focus on recognising and rewarding differential performance (both for above and below average performance)

© 2006 hay group llc. all rights reserved performance management: avoiding misalignment between...

Documents

hay group llc

consultants hay group

performance planning

business performance

performance of employees

successful performance

heart slide

employee behaviour slide