Is Employee Performance Management Performing? Presenters

Transcription

1 Is Employee Performance Management Performing? Exploring the Latest Findings from the Field February 8, 2005 February 8, 2005 Presenters Dr. Katherine Jones Research Director Enterprise Applications AberdeenGroup Mr. Clinton Wingrove Head of International R&D Performance Management CEO and Principal Consultant Pilat (North America) Inc. February 8, 2005 AberdeenGroup 1

2 Agenda Duration: 60 minutes Dr. Katherine Jones Research from the Field Mr. Clinton Wingrove Real World Experience Questions & Answers Download Slide Presentation February 8, 2005 Grandstand Performance Management: Managing Employees for the Performance-Driven Enterprise Dr. Katherine Jones Research Director The Destination of Choice for Actionable Research AberdeenGroup 2

3 Agenda Key Issues in EPM Today: The HR Exec s Agenda Challenges for Improvement Moving to Best in Class in EPM Next Steps for an Performance-Driven Enterprise 2004 AberdeenGroup 5 The HR Executive s Agenda on EPM Link payouts to total company revenue acquisition Link payouts with employee performance Ultimately measure the degree of alignment between the workforce and overall corporate performance Align individual behavior and work with corporate goals or scorecards Compare employees to their peers for ascertaining raises and bonus distribution Improved ability to improve an employee s skill levels and career path within the organization What Keeps Them Up at Night More accurate record keeping on employees, their skills and their performance Improve data collection in case we ever had a performance issue leading to the need to terminate an employee Percentages 2004 AberdeenGroup 6 AberdeenGroup 3

4 Prioritized Pressures Align individual behavior and work with corporate goals or scorecards (83%) Increase ability to improve an employee s skill levels and career path within the organization (82%) Link payouts with employee performance (80%) More accurate record keeping on employees, their skills, and their performance (79%) Ultimately measure the degree of alignment between the workforce and overall corporate performance (75%) Link payouts to total company revenue acquisition (70%) Prioritized Strategies Communication of core business objectives across the company (89%) Implement a culture of continuous improvement (89%) Alignment of employee and department behavior with corporate goals or scorecards (86%) Improve employee morale and retention (85%) Improve reward structure to retain top performers (84%) Delivery of competitive services to better retain employees (65%) 2004 AberdeenGroup 7 The required organization or potential process change is not warranted by the expected benefits Impediments to be Overcome Internally we are not ready for evaluating performance beyond its demonstration at the department level Not considered a strategic initiative or a top business priority Insufficient awareness of the value potential of aligned goals to go forward No compelling business value proposition has been developed to support this Percentages 2004 AberdeenGroup 8 AberdeenGroup 4

5 What Research Tells Us: Status Today 90% of the respondents see improved employee performance management as a key to gaining competitive advantage. 82% percent say that their employees work objectives are tied to corporate goals. 64% think employee achievement should be tied to demonstrable revenue outcomes. 73% of the respondents feel it is important that employees can articulate the corporate goals that their on-the-job behavior or their role at work influences. Fewer, however, used the corporate goals to define individual work objectives AberdeenGroup 9 Methods and Frequency of Employee Assessment Cascading goals from the CEO down to all employees Objectives linked to corporate goals or balanced scorecard Online measurement/record keeping Multirater/360 Once a year Multiple times a year On an ongoing basis Self-assessment Paper forms/interviews 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2004 AberdeenGroup 10 AberdeenGroup 5

6 Issues Identified: Managerial Training Training managers to conduct performance evaluations and the ability to tie employee objectives to corporate goals are seen as the biggest issues in managing employee performance. Training managers how to coach employees better was the highest rated priority (79%) 2004 AberdeenGroup 11 Report Card: Room for Improvement 52% are locked into paper-based evaluations that are conducted yearly and rarely reviewed again. 40% report that internally they are not ready to evaluate performance beyond its demonstration at the departmental level. Over a quarter felt that revisiting an employee s progress toward his or her goals more than once a year is unimportant. Almost a quarter reported insufficient awareness of the value potential of aligned goals to merit further attention to the matter 11% thought that the employee s ability to explain his or her job s relationship to corporate goals was not at all important AberdeenGroup 12 AberdeenGroup 6

7 Top of the Wish List A new electronic performance management system (32%) Investment in an electronic system to better articulate and manage employee s individual goals and their achievement (35%) 22% of companies participating have budgets in place for new or enhanced employee evaluation practices, procedures, or management systems within this calendar year AberdeenGroup 13 Aberdeen Comparative Framework The Deans List Best in Class Industry Norm Laggards 2004 AberdeenGroup 14 AberdeenGroup 7

8 What Do We Learn from Best in Class Companies? Best-in-class companies consider employee evaluation as on-going, with at least monthly discussions between employee and manager. Best-in-class companies see employee evaluation as an opportunity to foster employee growth Best-in-class companies are more likely to use automation as part of their employee management initiatives 2004 AberdeenGroup 15 Frequency of Employee Evaluation By Competitive Framework 80% 70% 60% 50% 40% 30% 20% 10% 0% BIC Average Laggard Never Once a Year Multiple Times a Year Ongoing Basis 2004 AberdeenGroup 16 AberdeenGroup 8

9 50% 45% 40% 35% Best in Class 30% 25% 20% 15% 10% 5% BIC Norm Laggard 0% No compelling business value proposition has been developed to support this Insufficient awareness of the value potential of aligned goals to go forward Not considered a strategic initiative or a top business priority Perceived Barriers Internally we are not ready for evaluating performance beyond its demonstration at the department level The required organization or potential process change is not warranted by the expected benefits 2004 AberdeenGroup 17 Comparisons Between Best in Class and Laggards: Perceived Barriers to a Performance-Driven Organization 70% 60% 50% 40% 30% 20% BIC Average Laggards 10% 0% Budget Constraints Lack of active executive support Lack of a compelling business case or the benefits of a performancebased environment are unclear Lack of technology maturity or functionality to support such an endeavor Employee performance management is seen as an HR initiative Not feasible for a company our size 2004 AberdeenGroup 18 AberdeenGroup 9

10 Best in Class Companies Employ Automation in EPM 26% 36% Automated (online) performance measurement tools Automated performance management record keeping 38% A performance management program with cascading goals from the CEO down to all employees 2004 AberdeenGroup 19 Distinctions in Leaders and Laggards Over half of the Best in Class companies use technology in managing their workforce to enable both timeliness and consistency Best in Class companies exceed the others in viewing employee evaluation as an ongoing process rather than a once a year, one-shot deal AberdeenGroup 20 AberdeenGroup 10

11 And the Laggards. Only laggards conducted no measurement of their workforce whatsoever Laggards exceeded the industry norm in viewing performance management as the bastion of HR Both laggards and the industry average far exceeded best in class companies in using employee evaluation solely for yearly budgeting, tied to raises and merit increases AberdeenGroup 21 Best in Class Companies in EPM Outperform Peers 90% 80% 70% BIC Average Laggards 60% 50% 40% 30% 20% 10% 0% Productivity Attitude toward Job work and the satisfaction corporation Revenue generation Employee Retention satisfaction with company in general 2004 AberdeenGroup 22 AberdeenGroup 11

12 Determining Best in Class Best in class, average and laggard companies were determined by the organizational processes that companies are using to manage Employee Performance. Companies were given a score based on a weighted average of the self assessment answers that the companies provided across the following areas: Overall processes Organizational structure and strategy Data and Knowledge management Technology utilized to support EPM We then examined a company s overall maturity and placed them in a particular subgroup based on the following: Top 20% of companies = Best in Class Middle 60% of companies = Average Bottom 20% of companies = Laggard We then examined additional aspects of EPM (metrics, performance, pressures, etc.) based on these sub-groupings AberdeenGroup 23 Key Take-Aways for the Less than Best: Steps for Laggards Know why you want to measure an individual s performance. If you see no reason to evaluate performance, then don t bother. If you do nothing whatsoever with a performance review and it does not influence a worker s job performance or effect compliance, you may as well not go through the motions at all. Proactively articulate a plan for a performance-driven culture. Assuming improving the workforce is indeed a priority, enlist top management behind a move to improve employee performance by defining what it should be. Begin communicating with your workforce. Moving to a performance-driven environment is an exercise in change-management. Prepare for it early; a change in how or why an employee is to be evaluated is frightening AberdeenGroup 24 AberdeenGroup 12

13 Key Take-Aways for the Less than Best: Steps for the Average Companies Put your money where your mouth is. Create a culture where on-going evaluation is part of corporate life; and managerial time is allotted to and rewarded for that endeavor. Train managers who are responsible for performance evaluation. Evaluation of performance and the follow-on coaching to improve it both require training. In addition, managers report discomfort at discussing performance with employees, especially that which needs improvement. A performance-driven culture requires open discussion of individual performance from the top down and that requires training at all levels. Evaluate automated performance tools. Eliminate manual, paper-based processes, and consider automated solutions that employ sharable planning worksheets, workflow, electronic record retention, Web-based record access, , and corporate-wide goal alignment AberdeenGroup 25 Key Take-Aways for the Best: There is Always Room for Improvement View performance management as a business process worthy of investment. Foster a corporate culture and business processes oriented around high performance. This takes an ongoing commitment to enterprise-wide communication. Create valid measures for employees performance. Articulate distinctions between the A, B, and C players. Ensure that these are quantifiable and that rewards based on performance distinguish between the results of these performers. Remember that you need to retain the B players as well as the super-stars! Drive toward corporate goal alignment. Measure performance based on proximity to achieving corporate business goals while remaining realistic about what employees actually have within their power to achieve and accomplish. An individual cannot be held accountable for goals he or she is powerless to successfully impact. Evaluating and improving workforce performance requires ongoing attention to managerial training. Increase managerial training on employee management, evaluation, coaching, and mentoring. This is not a one-shot event; it is an ongoing business process of managerial growth in itself AberdeenGroup 26 AberdeenGroup 13

14 Aberdeen Conclusions It is hard to improve what you cannot measure; it is impossible to measure outcomes if you cannot articulate not only the outcomes desired but the degree of quality required for those outcomes as well. Performance management can only be a good as the manager s ability to set objectives clearly, articulate goals and their relative value, define the levels of performance expected and explain how the employee is to achieve those levels. This requires training and commitment. The success of a corporation s workforce management endeavors will not be determined solely by technology: this research demonstrates that commitment of top executives to a performance-driven enterprise and the requisite interest, training, and dedication by middle level managers to the effort is paramount AberdeenGroup 27 AberdeenGroup 14

15 Clinton Wingrove, Head Of International R&D Performance Management CEO and Principal Consultant, Pilat (North America) Inc Pilat (North America), Inc. Who We Are Pilat is a leading global Human Resources Consultancy, Software-house and Services Company, founded in 1974 Global client base extends to Hong Kong, Switzerland, Saudi Arabia, Germany, Russia, Netherlands, Poland, etc. ~150 professional staff based primarily in USA, Europe and Israel: Occupational Psychologists understand people and their behavior Statisticians understand data and what it really tells us Information Technologists Experienced Managers understand the behavioral engineering power of technology understand the bottom line needs 30 AberdeenGroup 15

16 Our Vision & Mission VISION To be the leading supplier of data centric, HR Talent Management and Performance Improvement solutions MISSION To help our clients maximize human performance and realize human potential by: optimizing HR Processes that are proven to underpin superior personal performance and development employing the behavioral engineering power of Contemporary Technology, and enhancing the quality of decisions through rigorous Data Collection, Analysis, Interpretation, Management, and Usage Powering Performance & Potential TM 31 Pilat HR Solutions Performance Management Talent Management Development Management Organizational Surveys & Research Goal Setting Succession Planning Development Planning Auditing & Benchmarking Goal Alignment Competencies 360º Feedback Performance Review and Appraisal Talent Management Development Management Resumes Executive Assessment Development Tracking and Review Competencies Coaching Management Teambuilding Employee Surveys Data Analysis 360º Feedback Qualitative & Quantitative Research Development Management Risk Management Interactive e-learning Executive Assessment Action Planning and Follow Through Executive Coaching Process design, training and implementation Process design, training and implementation Process design, training and implementation Process design, training and implementation In-House/ASP services In-House/ASP services In-House/ASP services ASP services Compensation - Staffing 32 AberdeenGroup 16

17 Our Differentiators Our unique blend of in-depth experience: - Our own software house with over 20 yrs experience in Rapid Application Development - HR process design a consulting house of international repute working with governments, Fortune 500 and military clients - HR data analysis/literacy 25 years experience applying sophisticated statistical techniques to improve and make sense of HR data. HR Pulse a unique Rapid Application Development toolkit built specifically to meet the ever evolving demands and changing circumstances of HR. PASRAS Our unique Process and System Review and Specification workshop. 33 Performance Management A Typical Cycle LEAD Typically given high priority PLAN & ALIGN ASSESS INFLUENCE Typically given low priority 34 AberdeenGroup 17

18 From Performance Appraisal To Performance Management In our own dealings, we are seeing Enterprise Performance Management technology used to: - Increase the effectiveness of performance planning - Engineer behavior / enhance performance - Increase data quality - Make useful data more accessible - Manage compliance - Keep processes alive... but, without effective process design and robust implementation, results fall short of expectations. 35 Increasing The Effectiveness Of Performance Planning Supporting different planning processes: - push down cascade manager issues objectives, directions, etc - pull down cascade individuals take the lead from managers e.g. look at or copy their managers goals - individual creation individual creates own objectives and feeds upwards - matrix management matrix managers engages in the process - Spider Planning (project teams, service roles) 1-to-1 contracting Managing holistic performance plans: - WHAT (Goals/objectives that will be achieved) - HOW (Competencies that will be deployed, and how) - GROWTH (Learning/development to support on-job performance or preparation for future roles) Managing alignment of goals/objectives: - links to Vision, Mission and Strategy - links to Corporate, Divisional, Departmental, and other higher goals - links between Goals, Competencies, and Development Validating plans - referring plans for approval 36 AberdeenGroup 18

19 Engineer Behavior / Enhance Performance Technology is now a behavioral engineering tool: Triggering desired critical behavior through timely s (new and reminders) Triggering desired behavior through alerts and advisories Guiding process behavior through conditional Help & Information, Tutorials and system responses (e.g. Based on this input you need to speak with <name> ) Reinforcing behavior using responses and enabling access to new features Engaging significant others to approve, guide or reinforce total performance (What, How and Growth): e.g. Direct Reports - How was it for you? surveys) e.g. Coaches to engage with the individual re development Integrating processes such as performance planning, development and career/succession planning 37 Increase Data Quality HR and Managers need data that is: valid reliable differentiating useful Technology can help to increase data quality by: - delivering conditional training and tutorials e.g. based on biodata, access history, or actions taken - validating input using pick lists or validation rules - referring input for validation/approval - providing real-time feedback e.g. rater feedback - providing aggregate feedback e.g. average ratings by division - computing de-biased indices 38 AberdeenGroup 19

20 Make Useful Data Accessible Support mass user access and involvement - Employees, managers, executives, coaches, HR, etc. Provide search tools - Individuals meeting certain criteria - Plans meeting certain criteria - Assessments meeting certain criteria Provide analysis and reporting tools - Performance dashboards / scorecards - Process compliance - Aggregate analyses e.g. rating distributions - Engagement / activity levels - Data quality - Individual data / profiles - Indices e.g. Probability of Success - Trend analyses 39 Keep Processes Alive Any system is likely to work the first time the project team make sure, the vendor makes sure but, typically, the energy and excitement wane after implementation For processes and systems to be kept alive, they must: Cater for changing individual demands and circumstances (e.g. process for changing employees objectives) Adapt to changing organizational demands (e.g. new acquisition, new process for part of the organization) Provide for increasing process integration (e.g. integration with Recruitment, Succession/Talent Management, Development Management, Feedback) Increase in sophistication as the organization learns (e.g. provision of aggregate feedback, more comprehensive development management tools) Promote increased usage through applied motivation theory (e.g. extended Maslow s hierarchy of needs, and Herzberg s Hygiene and Motivator factors) 40 AberdeenGroup 20

21 Manage Compliance Involve the people for whom the process was designed Great processes only add value if implemented by those who need to follow them yet, typically: The keen do, and Those who need the processes avoid them Technology can: - detect non compliance - escalate continued non-compliance - report aggregate compliance / non-compliance - identify non-compliance cause and effect relationships - report aggregate non-compliance consequences 41 The Real Challenge HR is responsible for ensuring that the Performance Management processes and systems provided for Line Management to use are: - the best available - the most appropriate for the organization at any point in time, taking account of, for example line input, management commitment, and organizational readiness - regularly and frequently re-evaluated Line Management is responsible for: - providing input into the design and evaluation - implementation / compliance HR and Managers need to demonstrate courage: - HR to fight for what is needed; to insist that processes are either followed or scrapped; but not ignored - Managers to ensure that employees have truly challenging performance plans, and that objective assessments and feedback are provided - Managers and HR to provide realistic and differentiating reward and recognition to those who deserve it; not diminishing it for fear of the effect on the less-thangood performers - HR and Managers to manage and ensure compliance it is OK to do so! 42 AberdeenGroup 21

22 Questions & Answers Thank you for your participation. February 8, 2005 AberdeenGroup 22