making performance management work uncommon commonsense insights

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Speaker: Steven T. Hunt, Ph.D., SPHR Vice President, Customer Research SuccessFactors, an SAP company Moderator: Max Mihelich Associate Editor Workforce magazine

Making Performance Management Work: Uncommon Commonsense Insights

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Max Mihelich Associate Editor Workforce magazine


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Steven T. Hunt, Ph.D., SPHR Vice President, Customer Research SuccessFactors, an SAP company


Making performance management work: Uncommon commonsense insights Steven T. Hunt, Ph.D., SPHR Vice President, Customer Research E-mail: [email protected]

10 SuccessFactors Proprietary and Confidential © 2014 SuccessFactors, An SAP Company. All rights reserved.

If people hate performance reviews why do we keep doing them?


Why we do performance management

Increase productivity by ensuring employees are given feedback to learn from experience and incentives to increase their effectiveness.

Address counterproductive employee behaviors that limit or damage organizational productivity and drain organizational resources

Attract and retain high performing employees through encouraging, recognizing and rewarding performance contributions.

Provide a consistent and defensible set of standards for making decisions that impact employee welfare such as pay and termination.

Comply with legal requirements and cultural expectations related to fair and consistent evaluation of employee contributions.

Because “hire, pay & pray” is a lousy method for running a business


Myth: Performance management doesn’t work Reality: Effective performance management is central to creating a high performance organization

“Researchers have begun to try to determine the return on investment of… using better selection methods, better training and development, and better performance management applications…at this time, the order from most to least is rigorous performance management, then training and development, then selection” Eichinger, Lombardo & Ulrich, 2006

“the tracking of performance of individuals, reviewing performance (e.g., through regular appraisals and job plans), and consequence management (e.g., making sure that plans are kept and appropriate sanctions and rewards are in place)… are strongly associated with superior firm performance in terms of productivity, profitability, Tobin’s Q, sales growth, and survival” Bloom & Van Reenen, 2007


Myth: Employees don’t like performance management Reality: Employees want good performance management

25% of the “Gallup 12” engagement questions tie to Performance Management • “Do I know what is expected of me at work?”

• “Have I received recognition and praise for doing good work?”

• “Are my co-workers committed to doing quality work?” Buckingham & Coffman, page 28

Well defined, consistent evaluations directly impact employee fairness • “To improve both distributive and procedural justice…set clear rules that are applied

consistently by all supevisors” Aguinis, page 17


Myth: Social technology can replace traditional performance management Reality: We need to integrate new social techniques like crowd-sourcing with more traditional methods like annual reviews


What makes performance management difficult

Used to allocate limited resources (pay, jobs) About accurate data Requires comparing

performance of employees

Used to provide coaching and feedback

About dialogue Focuses on relative

strengths and weaknesses within each employee

Evaluating employee

contributions

Guiding employee

development

The Total Performance Management Cycle

Career Development

Performance Coaching


Performance Review



Performance Evaluation

Goal Setting

Goal Review

Goal Review

Goal Review

Goal Review

Performance Improvement

What have employees contributed?

Where should employees focus

development energy?

What do people need to

accomplish?

Learning & Development Investments

Succession Planning

How are employees doing?

(if needed) What must employees start or stop doing to keep their job?

How can employees be more effective?

Staffing Decisions

Compensation

Workforce Planning

Legend Business Operations

Employee Effectiveness Workforce Resources

How should the company utilize its workforce

resources?

Workforce Budgeting

Good performance management starts with good goal setting


Performance Management Critical Design Questions

1. What are the primary objectives of your performance management process?

2. How do you define effective performance?

3. How will you evaluate performance?

4. How will you calibrate performance?

5. What is the relationship between performance management data, pay, promotions, development, & workforce strategies?

6. How frequently do you measure performance? How does performance management fit into the business cycle?

7. What training do managers, employees and human resources personnel need to effectively utilize your performance management process?


1. What are the primary objectives of performance management?

•Development & Dialogue

•Standards & Decisions

•Differentiation & Reward

•Documentation & Compliance

Comply with legal or

contractual requirements

Motivate & attract high performing employees

Increase productivity

through feedback

Guide pay, promotion & termination

actions

Measurement


2. How do you define effective performance?

20

Overall Performance

Skills & Experiences “What you know”

Competencies “How you apply your knowledge”

Goals “What you are

trying to achieve”

3. How will you evaluate performance?

a) Integrate Objective Data

b) Employee Self-Assessment

c) Co-worker & Customer Input

d) Manager’s Initial

Assessment

e) Manager & Employee

Review

f) Manager’s Overall

Assessment

g) Manager’s Manager Review

h) Process Administrator

Review i) Talent Review

Sessions

j) Final Assessment

k) Providing Employee Feedback

l) Communicate pay & staffing

decisions

m) Performance improvement

plan (if needed)

Follow on actions tied to staffing,

succession, etc.

Legend Necessary steps

Commonly used steps Less common steps

4. How will you calibrate performance?

• Recognize and reward high performers • Address under performance • Invest more resources in those who contribute

more to the organization

Not everyone performs at the same level

• Base performance appraisals on employee actions, not manager attitudes

• Create consensus through conversation Not all managers evaluate employees the same may

• Provide information to managers that will help them coach employees

• Create transparency on the definition of high performance

Clear feedback on gaps between current and top level performance drives

growth

Fundamental Calibration Assumptions

5. How is performance data used?

Career Development



Performance Review



Performance Evaluation

Goal Setting

Goal Review

Goal Review

Goal Review

Goal Review

Performance Improvement

What have employees contributed?

Where should employees focus

development energy?

What do people need to

accomplish?

Learning & Development Investments

Succession Planning

How are employees doing?

(if needed) What must I start or stop

doing to keep my job?

How can employees be more effective?

Staffing Decisions

Compensation

Workforce Planning

Legend Business Operations

Employee Effectiveness Workforce Resources

How should the company utilize its workforce

resources?

Workforce Budgeting


6. How frequently do you measure performance?

Set strategy & budget

Workforce Planning & Org Design

Communicate performance expectations

Assigning goals

Coaching

Peer reviews and feedback

Mentoring and Learning

Formal performance evaluation

Training & Development

Compensation decisions

Staffing Decisions

Performance management should fit into the rhythm of defining business strategies,

allocating resources, & evaluating progress


7. What training do managers, employees, senior leaders & human resources need to use performance management?

But I try to avoid these difficult conversations!

25


Thank You

Steven T. Hunt, Ph.D., SPHR Vice President, Customer Research E-mail: [email protected]

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