How To Fix A Broken Performance Management Program How Leading Organizations are transforming Performance Management to maximize Business Value

Transcription

1 Orange County Convention Center Orlando, Florida June 3-5, 2014 How To Fix A Broken Performance Management Program How Leading Organizations are transforming Performance Management to maximize Business Value Jan Seele, PwC Mark Brandau, SAP

2 Agenda 1. Why many PM programs fall short of their basic promises 2. How to transform Performance Management 2.1 Trends 2.2 Case Examples 2.3 Leveraging Technology 3. Five steps to fix your performance management

3 Why many PM programs fall short of their basic promises

4 What is your PM program s focus? Evolving performance management solutions Serve as transformational agent for organization Proactive Manage disciplinary & low performance issues Determine compensation awards and incentives Drive long term talent development Reactive Identify and engage top talent (circle size indicates relative % of organizations at level)

5 Regardless of your strategic focus. How well are your performance management programs working?

6 Is Performance Management broken? Well.there s certainly a lot of room for improvement. of the workforce does not understand 95% the company strategy and goals. 1 84% of companies aren t using their workforce to its full potential. 2 50% of the average workforce s capacity is wasted on non-productive work. 3 1 Norton & Kaplan 2 PwC Saratoga Institute 3 Corporate Strategy Board Measures that Matter

7 PM solutions are often seen as bureaucratic 50% Even though... 50% believe their PM process is effective at driving organisational 9% performance...only 9% think their PM process helps get creativity and engagement from their people 79% 18% Even though... 79% believe their PM process appropriately takes into account individual behaviour...only 18% believe their people know how to measure behaviour consistently for PM purposes Is your PM process seen as a bureaucratic HR process that adds no value? 24% 32% 44% Yes Somewhat No Source: PwC 2013 Global Reward conference participant survey

8 Subpar PM takes a huge toll The so-called corporate kabuki of ratings-oriented reviews leaves employees mystified and frustrated. $ Average performers are promoted to leader positions True performers are unhappy and quit Escalating compensation squeezes margins

9 What should PM look like? There s a big gap between current practices and employee expectations. 59.8% US companies don t require managers to develop a plan for employee engagement 41% Millennials prefer to be rewarded or recognized for work at least monthly 65% companies either use paper or have no performance management system 78% Millennials say technology makes them more effective at work. 5 Source: 5 NextGen: A global generational study (2013, PwC).

10 What can be gained from fixing PM Engaged, focused and well-coached employees can improve the company s top and bottom lines. 5% 15% 13% or more increased time spent on strategic priorities jump in project completion rates or more decreased turnover

11 The 2 Sides of Performance Management Is your company striking the right balance for your company? for your employees? Performance Management programs that use the same tools and processes to rate employee contributions and plan employee development do neither well. Forward looking companies address each separately. Evaluating employee contributions Guiding employee development

12 Three broad trends in PM Focus on Development and Real Time Feedback (rather than evaluation of past performance) Simplification, ease of use and interaction de-cluttering Enterprise-view. focus on Team results (in addition to individual performance)

13 How to transform Performance Management

14 Case Study I: Leading Global Hotel Chain ISSUE Hilton was facing inconsistent compensation processes globally (over 3,700 hotels and resorts in 85 countries) Process and system harmonization presented a challenge across 85 countries ACTION Allocated significant resources toward the implementation of SuccessFactors Goal Management, Employee Profile, Compensation Management, and Performance Management Introduced all modules to a control group before expanding to the larger organization OUTCOME Consistent process and tool implemented across 12,000 employees Global process consistency

15 Case Study II: Oil & Gas Company ISSUE ACTION OUTCOME Leading oil and gas company faced with the need to create a culture of safety and risk management Entirely new performance management program was designed, spanning several divisions and 70 countries ~25% more employees identified a development action to address one of their development needs Seeking to foster greater teamwork and individual employee goals aligned with long-term company strategy Focus put on developing and implementing performance objectives tied to defined business objectives Number of employees who created objectives with a clear timeframe for completion increased Performance management program had become a lackluster, annual check-thebox routine Managers coached to cultivate better listening skills and brainstorm with employees on creative ways to help them reach defined individual goals Employee compliance with the objective-setting process significantly increased Improvements were made in 3 critical areas: cascade of goals, focus on safety and quality of objectives

16 Case Study III: Diversified Manufacturing Company ISSUE ACTION The company did not have a bonus program for hourly and facility management employees. PwC identified key objectives for the facilities, metrics used to determine success and their contributions to company profitability, and necessary behaviors from employees to achieve success Employees did not feel invested in the success of the company since they did not have the line of sight between their efforts and company success. The lack of linkage to the company reduced engagement, and created retention issues The team analyzed the payfor-performance relationships, and developed a gain sharing-type bonus program PwC modeled the financial impacts of the program to determine how it would drive profitability OUTCOME Productivity increased as employees experienced the linkage between their efforts and facility/company success through tangible rewards. Company messaging was more effective since all facility employees shared together when the facility met the company s expectations. Engagement increased and turnover decreased as employees felt more cohesion and connectedness to their colleagues and the company.

17 Case Study IV: Performance Transformation at Professional Services Firm ISSUE ACTION Organization had been developing its performance program iteratively for years, but was faced with extensive administrative burden and an inability to foster real-time feedback and development Consolidated multiple expectations frameworks into a new, simplified professional framework Year-end was a check-the-box activity Simplified the ratings structure Launched a mobile application to capture realtime feedback Piloted the changes over a full performance cycle with various test groups and made program adjustments accordingly OUTCOME Program launched to entire employee population of over 100,000 Eliminated thousands of hours of feedback form creation and review Improved timeliness of reviewer feedback, supporting real-time development Positive adoption from Millennial population of accessible, user-friendly technology

18 Leveraging technology

19 SuccessFactors Performance & Goals Clarify & Increase Organizational Alignment Cascade goals from executive management to every employee; SMART Goal Library; Mobile goals Social Collaboration Recruiting Workforce Analytics Onboarding Learning Succession & Development Core HR Performance Compensation & Goals Content Payroll Integration Increase Accuracy & Relevance of Formal Reviews WorkforceWriting and Coaching Assistants with Legal Planning Check, Calibration, 360 Reviews Deliver Continuous Coaching and Development Mobile Touchbase for continuous development; Extensibility Team Rater for quick team and individual review

20 Intuitive Goal Management SMART Goal Wizard Visually cascade goals to individuals Identify who is working on which goals Regularly communicate goal status/updates Monitor goal progress

21 Highly-Engaging Performance Reviews Intuitive, easy to use Writing and coaching assistants Legal check Key part of comprehensive talent management

22 Team Rater Quickly assess everyone on your team in real time Instantly see your team ranked from top to bottom Identify your top players and cultivate them Spot your lowest performers No tie scores

23 More with 360-Degree Assessments Break down barriers Find hidden strengths and weaknesses Support for internal and external raters Configurable workflows Outlook integration 360-Degree Feedback Systems Can Yield As Much As 700% ROI*

24 Calibration Instill Fairness & Retain Talent 9% of performance ratings are changed during calibration Review pay and rating decisions together Adjust pay immediately Eliminate subjectivity promotes trust and fairness Better use of budgets

25 5 Steps to fix your PM Solution Determine what outcomes the PM program should drive 1 2 Rate Yourself Honestly assess what your current program is accomplishing Pilot major changes throughout and adjust accordingly 3 Know your Purpose 4 Focus and Simplify 5 Implement Smart Identify just those program elements that meet your objectives Measure Create a dashboard and measure regularly

26 1. Rate Yourself Key Questions: How is your program perceived by staff and leadership? What behaviors is your program truly driving? How effectively do staff set goals and how well do managers give feedback? How well does your PM system support the process? Actions: Conduct a pulse survey and interview top leaders Review your original performance program objectives

27 2. Know Your Purpose Key Questions: Which employee behaviors help me drive my business strategy? What are the top 3 objectives for the program? What kind of culture do I want to reinforce? Actions: Translate your business objectives into a people strategy and define performance goals Articulate the culture and values the program is meant to develop

28 3. Focus and Simplify Key Questions: Is each step of the process focused on our core objectives? How user-friendly is our Performance Management System? Does our system support or harm the Performance process? Actions: Identify the core behaviors and KPIs you want to measure and lose the rest Enable real-time feedback and eliminate lengthy reviews

29 4. Implement Smart Key Questions: How can I make changes meaningful and visible for the business? How can I leverage new technology solutions (and how do they integrate with existing technology)? Actions: Focus on quick wins that demonstrate change Pilot changes across smaller populations and adjust based on findings

30 5. Measure, measure, measure Key Questions: How can I combine my HR data with other metrics from the organization? Are my measurements relevant to business performance? Am I tracking the same key metrics consistently over time? Actions: Institute a quarterly dashboard review of consistent metrics that integrate HR and business metrics Automate distribution of key metric reports to managers and leaders

31 FOLLOW US

32 THANK YOU THANK YOU FOR PARTICIPATING Please provide feedback on this session by completing a short survey via the event mobile application. SESSION CODE: 1810 For ongoing education on this area of focus, visit

33 Top Reasons to move to the cloud Predictable Costs and Lower TCO: No big up-front costs, no upgrade, license and maintenance costs. You pay a single annual per-user subscription. Automatic Updates: New features and innovations based on customer requests are available each quarter, automatically. Reliability: In the cloud the vendor is responsible for speed, downtime and disaster recovery. SuccessFactors has a record of more than 99.9% uptime. Time to value: SuccessFactors typical implementations range from 4 weeks for the basic platform to 6 months for Core HR Adoption: Easy, browser-based access, an intuitive interface you can customize easily, and a wide range of training offerings.

34 Top Reasons to move to the cloud Security: Cloud vendors typically can provide a higher level of security (physical premises as well as technical security) than most companies could achieve. Compliance: SuccessFactors handles compliance requirements for 80+ countries. We hold the product to rigorous standards to ensure that compliance is always up-to-date. Extensibility: The architecture and extension framework make it easy to apply unique application requirements. Scalability: SuccessFactors solutions were built for the cloud from the start. Therefore the architecture meets all IT requirements and best practices for scalability. Integration: As an SAP company, SuccessFactors integrates with all your SAP applications so you can get the most from your data from your entire organization.