performance management - aon hewitt
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TRANSCRIPT
Performance ManagementHelping you make it happen!
17 October 2011
1
Agenda
Current environment for performance management
Client experience & discussion
Summary & suggestions for how to get things right
2
“Evaluation of performance, merit rating or annual review is a deadly disease of management.”
(W. Edwards Deming)
“Rarely in the history of business can such a system have promised so much and delivered so little.”
(Keith Grint)
“A dishonest annual ritual.”(Armstrong & Murlis)
There have always been those who questioned performance management…
3
19%32%
48%
120%
0%
25%
50%
75%
100%
125%
Low Moderate High High-Sales
Complexity of Job
Difference in Productivity of High vs. Average Performers by Complexity of Job
J.E. Hunter, et al., “Individual Differences in Output Variability as a Function of Job Complexity,” Journal of Applied Psychology, 1990
Diff
eren
ce in
Pro
duct
ivity
of
Hig
h Pe
rfor
mer
s
$176.2($34.8)$211.0120%$175.8High—Sales
($27.8)
($11.6)
($4.3)
$ Spent (000’s)
$55.5$83.348%$173.5High
$19.3$30.932%$96.4Moderate
$5.9$10.219%$53.7Low
Net Profit per Top EE (000’s)
$ Saved (000’s)
Profitability Gain/ Headcount Reduction
Avg. Base, Bonus + Benefits (000’s)Job Complexity
Profits Realised if One Employee Moves from Average to High Performance
One technology company’s recent projections
What we’ve known since the ’90’s… is even more important right now
A direct impact
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A direct impact
0
20
40
60
80
100
120
Low HighSophistication of HR Practices
Mor
talit
y
Source: West et al
A hospital which appraises 20% more staff and trains 20% more appraisers is likely to have 1,090 fewer deaths per 100,000 admissions
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And most of us do it…
31%
71%
84%
85%
Performance relatedpay link
Personal developmentfocus
Integrating individual andorganisational goals
Annual appraisal andobjective setting
87% of organisations have formal PM schemes
CIPD, n = 506
6
External trends: changes in performance management
Source: E-reward. Rankings are based on the % of organisations with performance management systems planning changes
Past Changes
1 Competencies inclusion
2 Enhancing pay link
3 More regular meetings / feedback
4 Simplification
5 Link performance management to strategic business goals
Past Changes
1 Competencies inclusion
2 Enhancing pay link
3 More regular meetings / feedback
4 Simplification
5 Link performance management to strategic business goals
Future Changes
Enhance link to pay
Streamline the performance management process
Provide more coaching / development for appraisers
Review / improve ratings process
More regular feedback
Future Changes
Enhance link to pay
Streamline the performance management process
Provide more coaching / development for appraisers
Review / improve ratings process
More regular feedback
• 74% have been making changes in last 3 years, 48% plan changes• Issues include unclear objectives, over-complexity and poor management
7
External trends (cont)
Greater differentiation between outstanding & average performers
Commonest number of ratings still five
Over half rate ‘how’ as well as ‘what’ & a quarter rate potential as well as performance
Simplified & clearer processes e.g. competencies.
Development of line managers – mandatory training & coaching
Focus on ‘the conversation’, more investment in employee communication & training
Greater employee involvement
Move to more frequent but shorter meetings
An overfull suitcase
Source: People Management “Performance management: Fine intentions” / 30 August 2011
http://www.peoplemanagement.co.uk/pm/articles/2011/08/performance-management-fine-intentions.htm8
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Factors relating to success include
Clear links to corporate vision & goals
Example set from the top – importance of process emphasised & reinforced
Competent & trained managers
Investment in communication
Moderation & comparative processes
Rated & valued by employees
Does what it says on the tin!
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Creating the conditions for people to excel
Sustainable high performance requires manager capability in these essentials
Across the organisation, we have to get three things right
Everyone working on what’s important, getting it done, and playing by the rules
Skill-building in every assignment and job, guided by business needs
The people we depend on feel valued and confident, ready to give their best
Accountability for the right results
Trust earned one person at a time
Opportunity for impact and growth
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Sending the right messages to each type of performer
Motivated Successful Special
High Performers
Solid Contributors
Under Performers
X
X
X
X
X X
How do we want each level of performer to feel?
This is where the action is… and where most performance
systems fall short
12
Setting high-reach goals is an important driver of a performance culture
Lower Level of Challenge
Highest Level of Challenge
Most Goals Should Be Here
• Achievement is very risky and will require extreme effort and / or skill.
• Represents a significant challenge and breakthrough accomplishments.
• Requires significant development of a new skill or many new skills.
• Requires significant innovations in work methods and / or technology.
• Requires extensive coordination and cooperation from many different stakeholders.
• Is achievable with performance at last year’s level.
• Represents little new challenge.
• Existing skills may be minimally challenged and new skills are not required.
• Existing technology, tools and processes are applied or adapted.
• Requires limited coordination and cooperation from others.
• The level of performance that an organisation’s targets require.
• A realistic challenge – a high reach that’s achievable given strong effort.
• Existing skills are challenged and new skills may be required.
• Innovation may be required in work methods and / or technology.
• Requires a focus on coordinating and cooperating with others.
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What do you do now?
Examine your performance management system and process from different perspectives.
Consider what you’re trying to deliver with your performance management approach – is it too much? Are the goals clear?
Consider all the players in the process: are they engaged, prepared and willing to deliver what’s required?
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Aon Hewitt Global Footprint
More information
Duncan Brown T: +44 (0)207 086 9037 E: [email protected]@duncanbHR
Jackie Waller T: +44 (0)172 788 8394 E: [email protected]
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