Modern Performance Management and Next-Generation Recognition and Rewards

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2 About Bersin & Associates Who We Are Bersin & Associates empowers HR and Learning organizations to drive bottom line impact through world class research and consulting Practices Enterprise Learning Human Resources Leadership Development Talent Acquisition Talent Management - Performance Management - Succession Management - Career Management - Workforce Planning Services WhatWorks Membership Research-based consulting services IMPACT: The industry s premier conference on the Business of Talent Join us in St. Petersburg, FL on April 10-12! Copyright 2011 Bersin & Associates. All rights reserved. Page 2

3 Agenda Performance Management (PM) and the Role of Recognition and Rewards Evolution of PM Where recognition and rewards fit Why recognition and rewards are hot today How Recognition and Rewards Work The role of recognition and rewards for the individual and the organization The impact on critical outcomes Modern Recognition and Rewards The recognition and rewards marketplace What s different about next-generation recognition and rewards Examples of what they looks like Key Takeaways and Q&A Copyright 2011 Bersin & Associates. All rights reserved. Page 3

4 What is Performance Management? Employee performance management is a set of management practices that: Establish measurable goals and objectives for employees; Assess attainment of such objectives; and, Use this information to improve performance through coaching, compensation, development and other means. Most importantly, performance management is management! Copyright 2011 Bersin & Associates. All rights reserved. Page 4

5 The Beginning of Our Inquiry The Bersin & Associates Performance Management Framework Performance Management Strategy Purpose of PM PM Philosophy PM Alignment to Strategy and Culture Level of Senior Leader Ownership PM Sustainability Talent Management Integration Structures & Roles Governance Communication Tools & Resources Goal Setting & Revising Executive Goal Setting Goal Cascading & Alignment Employee Goal Setting Goal Revision Ongoing Performance Activities Managing & Coaching Work Plans Management Responsibilities Feedback Coaching Development Planning Individual Development Plans Development Opportunities Career Management Performance Appraisal HOW Quarterly, Semi-Annual and/or Annual Reviews Multi-Rater Feedback Self- Assessment Manager Assessment Distributions and Rankings Performance Calibration Performance Improvement Plans Performance Management Outcomes Rewarding & Recognizing Compensation Reviews Financial Rewards Non- Financial Rewards Recognition Strategies & Programs WHAT Competencies/Behaviors Goals Job Responsibilities Capabilities Promotion Readiness Multi-level Structure Focus on Key Driving Messages Business Results Empowered and Engaged Workforce Foundational Knowledge of Talent PM System TM System Integration Knowledge Sharing & Collaboration Metrics & Analysis Technology & Infrastructure Copyright 2011 Bersin & Associates. All rights reserved. Page 5

7 Polling Question How familiar are you currently with the role recognition and rewards can play in modern performance management? 1. Very familiar (I frequently articulate the role of R&R in PM to others) 2. Familiar (I understand the role of R&R in PM) 3. Somewhat familiar (I kind of understand the role of R&R in PM) 4. Mostly unfamiliar (I ve heard a little about the role of R&R in PM, but know little) Copyright 2011 Bersin & Associates. All rights reserved. Page 7

9 Engagement on the Decline Differences in Engagement Before and After Financial Crisis Engagement Indicators Senior Leaders Middle Managers Employees Change % Change % Change % -5% -14% -6% -5% -10% +3% Score in 2009 Source: BCG, Creating a New Deal for Middle Managers: Empowering a Neglected but Critical Group, Scores range from 1 (very dissatisfied) to 5 (very satisfied). Copyright 2011 Bersin & Associates. All rights reserved. Page 9

10 Engagement on the Decline Differences in Engagement Before and After Financial Crisis Engagement Indicators Senior Leaders Middle Managers Team Members Change % Change % Change % -5% -14% -6% -5% -10% +3% Score in 2009 Source: BCG, Creating a New Deal for Middle Managers: Empowering a Neglected but Critical Group, Scores range from 1 (very dissatisfied) to 5 (very satisfied). Copyright 2011 Bersin & Associates. All rights reserved. Page 10

11 Recognition Down Across All Groups Differences in Engagement Before and After Financial Crisis Engagement Indicators Senior Leaders Middle Managers Team Members Change % Change % Change % -5% -14% -6% -5% -10% +3% Score in 2009 Source: BCG, Creating a New Deal for Middle Managers: Empowering a Neglected but Critical Group, Scores range from 1 (very dissatisfied) to 5 (very satisfied). Copyright 2011 Bersin & Associates. All rights reserved. Page 11

14 What does Recognition do for Employees? Recognition helps organizations achieve the necessary balance of positive to negative feedback Negative Feedback Positive Feedback Employee Motivation Copyright 2011 Bersin & Associates. All rights reserved. Page 14

18 Most Organizations Recognize But far fewer reward Individual / Team Recognition Formal Reward Program Source: Bersin & Associates High Impact Performance Management research, Q4 2011, n=193 Copyright 2011 Bersin & Associates. All rights reserved. Page 18

19 Reward Frequently and Fairly Relationship between rewards and results Reward Type Incentives Rewards Reward Activity Employee Results Talent Management Results Business Results Merit increase to base pay Strong Strong Strong Annual bonus None Strong Medium Semi-annual or quarterly bonus Strong Strong None Formal reward program Recognition Individual / team recognition Strong Strong Strong Strong Strong Medium Source: Bersin & Associates High Impact Performance Management research, Q4 2011, n=193 Copyright 2011 Bersin & Associates. All rights reserved. Page 19

20 Individual / Team Recognition Those organizations with recognition mechanisms have better employee and talent management results 14% 15% Source: Bersin & Associates High Impact Performance Management research, Q4 2011, n=193 Copyright 2011 Bersin & Associates. All rights reserved. Page 20

25 The Rise of Social Media Facebook dominates all others Source: Nielsen: State of the Media Report, Q , accessed via Business Insider: nsider.com/chart-ofthe-day-facebooktime Billions of Minutes Copyright 2011 Bersin & Associates. All rights reserved. Page 25

26 Social Networking: Not Just a Gen Y Thing Over twice as many people aged 55+ visit social networking sites on their mobile phone this year compared to last Use of Browser on Mobile Device by Age and Race/Ethnicity 16% % African American Source: Nielsen: State of the Media Report, Q , m/nielsenwire/social/ 44% Native American/ Alaskan Native 61% % Hispanic Origin 67% White Race/ethnicity demographics Age demographics 68% % Other 76% Asian/ Pacific Islander 109% 55+ Copyright 2011 Bersin & Associates. All rights reserved. Page 26

30 Key Takeaways Performance management is becoming more ongoing; recognition and rewards are part of this trend. Employee recognition has declined substantially over last few years and so has employee engagement. Next-generation recognition and rewards combines social networking, people s fundamental need for appreciation and the goals of the organization Rewards and recognition correlate with better employee, talent management and business results. Copyright 2011 Bersin & Associates. All rights reserved. Page 30