1、Executive Human Resource ProgramThe Promise of Performance ManagementHay GroupBoston 0109-9271-HAYG Lemaire2The Current Challenge of Performance ManagementThe HR processn Is completely unrelated to other key business processesn Is dreaded by managers and employees aliken Does not result in any meani
2、ngful feedbackn Does not differentiate performance or payn Is a focus for only one or two daysor hoursper year0109-9271-HAYG Lemaire3The Promise of Performance ManagementImagine a system that couldn Increase the likelihood that your strategy is effectively executedn Harness and direct the 1060 minut
3、es a day of discretionary effort that every one of your employees hasn Rationalize and focus the number of goals that anyone in your organization hasn Improve the decisive dialogue that occurs in your organizationn Reward performance in a way that it is motivating and engages peoplen Differentiate p
4、erformance in ways that make line managers feel good about their decisions0109-9271-HAYG Lemaire4PerformanceNumber of EmployeesSource:Hay/McBerOptimizing the performance of your people will have a positive impact on business performanceImproving Performance Management Improves Business Results0109-9
5、271-HAYG Lemaire5Percentage of variation in change in company performance accounted for by managerial practices19%2%1%1%6%18%3%1%1%8%0%10%20%30%40%ProfitabilityProductivityHRMStrategyQualityTechnologyR&DSource:Sheffield Effectiveness ProgrammeHuman Resource Management Practices Drive Profitability a
6、nd Productivity0109-9271-HAYG Lemaire6Highly Successful Companies are defined as havingn5-year sales growth=17.5%per yearn5-year profit growth=10.8%per yearnAnnual equity growth=16.7%per yearn5-year dividend growth=13.4%per yearSource:D.Karvetz,The Human Resources RevolutionClear Employee GoalsParti
7、cipative StyleAttention to DevelopmentEncourage CreativityPerformance-Based RewardsHighly SuccessfulCompaniesLess SuccessfulCompanies80%70%67%62%86%26%4%27%10%30%High-performing companies are better at managing,motivating,and rewarding employeesImproving Performance Management Improves Business Resu
8、lts0109-9271-HAYG Lemaire7Source:Mavrinac&Siesfield,Measuring Intangible InvestmentStrategy Execution Matters to ShareholdersThirty-five percent of an institutional investors valuation of a company is attributable to nonfinancial information that gauges the ability of the management team to deliver
9、results:nStrategy Execution:Can management make tough decisions and seize opportunities quickly?nManagement Credibility:Does the company keep its commitments?nStrategy Quality:Is managements vision of the future likely to optimize value creation in a volatile,globalized,and connected economy?nInnova
10、tiveness:How readily does this company adapt?nAttracting and Retaining Talent:Is turnover higher or lower than key competitors?Do new hires surpass leavers in skills and experience?nManagement Experience:What skills and experiences does the management team bring to the table?nCompensation:Do compens
11、ation policies support the firms strategic intent?0109-9271-HAYG Lemaire835%improvement in human-capital systems resulted in 10%20%gain in shareholder valueAlignment and Integration of HR System“Human Capital”Enhancements290310330350370390020406080100Quintile Improvements in Strategic Market Value p
12、er Employee(000)Source:Huselid and Baker,1995Human Capital Systems Increase Shareholder Value0109-9271-HAYG Lemaire9Improving Performance Management Improves Business Resultsn High-performance companies define Performance Management in its broadest sense:it is critical to executing and implementing
13、strategyn Performance Management is now widely recognized as delivering more returns and delivering more competitive advantages than other HR investments n Performance Management is the key to“raising the bar”in an organization,for all levels of performancen Organizations with a high-performance ori
14、entation and strong management capability have higher revenue,profits,and market valuations 0109-9271-HAYG Lemaire10Performance Managementn Performance Management is about improving business performance by improving team and individual performance,and ensuring that the companys strategy is executed
15、and implemented.It islA process that ensures that people execute the strategy of the organizationlA process for establishing a shared understanding of what is to be achieved and howlA process for ensuring that decisive and constructive dialogue occurslA process of managing self and others so that pe
16、ople do achievelA process for ensuring that people are doing the right things in the most effective ways,to the best of their ability0109-9271-HAYG Lemaire11Performance Management StagesDesign ParameterPerformance AppraisalPerformance ManagementPerformance OwnershipHuman Resources“Check the box”comp
17、liance-orientedManage poor performersPassiveReport card(retrospective)Managers and Human ResourcesEvaluation reward emphasisManage the tails of bell curveJoint ownership for goal-setting/reviewBarometer of progress(periodic)Employees,managers,and leadershipStrategic clarity,coaching,dialogueRaise pe
18、rformance of organizationShared accountability for resultsDialogue(continual)FunctionRole of EmployeeFocusEmphasesOwnership0109-9271-HAYG Lemaire12Performance AppraisalPerformance ManagementManaging PerformanceHighLowLowHighImpact on ResultsLevel of Organizational CommitmentImproved business results
19、 require organizational commitmentCommitment to achieve company goalsGood setting and reviewMerit increases efficiently allocatedPerformance Management Stages this0109-9271-HAYG Lemaire13The performance management model is not new,but the way in which leading organizations do it is very different&Di
20、alogueDialogueDialogueDialogueBest Practices0109-9271-HAYG Lemaire14Best PracticesWhats Different?There are four differentiators of best practice:n Clear Strategy Translation Processn Integrated Performance Processesn Culture of Dialoguen Multiple and Differentiated Rewards 0109-9271-HAYG Lemaire15S
21、trategy Translation ProcessA Definition:“Early in the history of the company,while thinking about how a company like this should be managed,I kept getting back to one concept:if we could simply get everyone to agree on what our objectives were and to understand what we are trying to do,then we could
22、 turn everybody loose and they would move along in a common direction.”Dave Packard0109-9271-HAYG Lemaire16Strategy Translation ProcessChecklist:o Are all top team members unified and focused on the“must-win”battles of the organization?o Are the interdependencies clear between the top-team members?o
23、 Are the middle managers clear on the“must-win”battles?o Do employees know what they need to do for the organization to be successful?lFinancial goals,operational goals,behaviors0109-9271-HAYG Lemaire17Integrated Performance ProcessesA Definition:“Leaders must see to it that the organizations social
24、 operating mechanismsthat is,the executive committee meetings,budget and strategy reviews,and other situations through which people do businesshave honest dialogue at their center.These mechanisms set the stage.Tightly linked and consistently practiced,they establish clear lines of accountability fo
25、r making decisions and executing them.”Ram Charam,HBR 4/20010109-9271-HAYG Lemaire18Integrated Performance ProcessesChecklist:o Do the goals of the organization reflect interdepartmental objectives?o Are the financial,operational,and people processes integrated?o Is the information from these proces
26、ses used to make business decisions?o Are the processes efficient and effective?0109-9271-HAYG Lemaire19Culture of DialogueA Definition:“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 observation
27、s.If,at the end of the year,someone is truly surprised by what you have to say,that is a failure of leadershipBy 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”EDSs Dick
28、 Brown0109-9271-HAYG Lemaire20Typically a new employees productivity curve increases quickly,then levels offWithout reinforcement and feedback the level stays the same or may fall offSporadic,inappropriate,or general feedback without reinforcement has a distinctive effect on motivation and performan
29、ceConsistent,specific feedback and dialogue build self-esteem and performanceFeedbackFeedbackFeedbackFeedbackCulture of DialoguePerformance Coaching/Feedback Is Critical0109-9271-HAYG Lemaire21Culture of DialogueChecklist:o Are managers(and employees)trained in and good at performance dialogue?o Are
30、 managers selected and held accountable for performance coaching?o Are coaching behaviors“lived”by the leaders of the organization?o Is the dialogue open,informal,and candid,and does it provide closure?0109-9271-HAYG Lemaire22The better my performance,the better my total compensation will beMultiple
31、 and Differentiated Rewards35%27%38%0%10%20%30%40%AgreeNeutralDisagreeWhen most employees,even the stars,get the same pay,it reduces clarity about what good performance looks likeSource:Hay Group0109-9271-HAYG Lemaire23Multiple and Differentiated RewardsApproaches:n Increase dialoguen Use multiple c
32、urrenciesn Review use of ratingsn Use forced rankingsn Find new ways to differentiate merit0109-9271-HAYG Lemaire24Differentiated RewardsSeparate means from endsTactics/StrategiesBehaviorsTrainingTrainingTrainingTrainingTactics/StrategiesBehaviorsTrainingTrainingObjectivesEnablersConduct analysis of
33、 why OT is so high;develop strategy to reduce OT;implement strategyImplement 3 programs aimed at increasing customer satisfaction:begin training programs;upgrade call center software;establish a monitoring programSet high goals for yourself and for the team:try to reduce from 50 to 30 per month;comm
34、unicate to team what needs to be done;“own”this processIdentify customer issues:think about and act on opportunities to address these issues;act as a role model to subordinatesshow them how to work with customers;improve call-center software systemTrainingTrainingTactics/StrategiesBehaviorsDevelop a
35、 plan to meet with each of your subordinates and get the“pulse”on how they are doing(re:jobs,projects,expectations);develop career-pathing plans with each of your subordinates;develop ideas around nonmonetary rewardsCoach consistently:deliver timely and constructive feedback;address issues immediate
36、ly;make sure others contribute and have what they need to do the jobTactics/StrategiesBehaviorsBusiness ObjectivesCareer Development ObjectivesImprove consistency of customers delivery(evidenced by 98%customer satisfaction)Goals set for yearImprove employee retention in department by 50%Goals set fo
37、r next 8 monthsReduce overtime from 150 to 50 hours/month(cost not to exceed$12,000)Goals set for year0109-9271-HAYG Lemaire25Extent ofDifferentiation1.Company wide success measures Company revenue Profit ability measures None None2.Business unit success measures Unit revenue Profitability measures
38、Other measures Annual incentive Some,based on individual contribution3.Success measurescurrent role Contribution to unit/company measures Salary increase Little4.Requirementscurrent role Meet“current”job description Live the values None None5.Success measuresfuture roles Demonstration of success com
39、petencies/behaviors Achievement of development goals Future earnings Salary Annual incentive Long-term incentive Recognition Significant,based on potentialMeasuresFirst-Level ManagersRewardLinkage1.Company-wide success measures Company revenue Profitability measures Long-term incentive Annual incent
40、ive Some,based on role Some,based on role2.Business unit success measures Unit revenue Profitability measures Other measures Annual incentive Significant,based on unit performance3.Success measurescurrent role Contribution to unit/company measures Annual incentive Some discretionarycomponent4.Requir
41、ementscurrent role Meet current job description Live the values None None5.Success measuresfuture roles Demonstration of success competencies/behaviors Achievement of development goals Future earnings Salary Annual incentive Long-term incentive Recognition Significant,based on potential Salary incre
42、ase tied to market movement LittleMeasuresExecutivesRewardLinkageExtent ofDifferentiationExtent ofDifferentiationDifferentiated RewardsDont double-count!0109-9271-HAYG Lemaire26In Summary:Two ExamplesPerformance Aligning ProcessesPerformance Coaching/FeedbackDifferentiated RewardsnSignificant emphas
43、is on management processes on integrated talent managemente.g.,two-day detailed evaluation of business with managers being color-codednCEO models desired behaviorslTeaches/coacheslMentors/counsels high performersnSignificant investment in training/developing people to be good coachesnBusinesses rank
44、ed at multiple levels and information is publicly sharednHeavy use of incentives(up to 50%,even for first-level managers)nStrong financial and operational processeslCEClSession ClS1/S2nSignificant movement of star talentnOpen,candid dialogue that stretches individuals and organizationsnFrequent conv
45、ersations about performance and developmentnSignificant investment in training/developing people to be good coachesnPerformance measured at multiple levelsl20-70-10 plan launched in 1996lForced ranking systemlTop 20%rewarded so likely few leavelBottom 10%given opportunity to improvelApplies at all levelsThe PrerequisitesnAspirational missionnClear strategynHighly decentralized organizationnEVP“Super jobs for super people”nAspirational missionnPortfolio strategynTough,stretch targetsnHighly decentralizedPepsiCoGEOrgani-zation
