performance management andre o’callaghan october 2008
TRANSCRIPT
Performance Management
Andre O’CallaghanOctober 2008
• Since my last report, this employee has Since my last report, this employee has reached rock bottom and shows signs of reached rock bottom and shows signs of starting to dig.starting to dig.
• I would not allow this employee to breed.I would not allow this employee to breed.• Works well under constant supervision and Works well under constant supervision and
cornered like a rat in a trap.cornered like a rat in a trap.
Introduction
• He sets low personal standards and then consistently fails to achieve them.
• This associate is really not so much of a has-been, but more of a definitely won’t be.
Introduction
• 85% have a PMS• 95% have strong commitment of the CEO• 94% have a formal communication strategy• 51% believe employees & managers are
adequately educated & trained in PMS
Some Perspectives
• 37% use the balanced scorecard methodology• 86% allows joint target setting• 91% have clear PMS policies, procedures and
systems• Most companies measure performance using
hard and soft measures• 2001 Deloitte & Touche HCC Survey
Some Perspectives
• What is Performance Management?
If 85% of companies apply it, what do they actually do?
• Group Discussion
Define Performance Management
• The process of ensuring individual and team effort support the organisational objectives and to realise key stakeholder expectations and wealth creation in all the identified value drivers of the organisation.
Define Performance Management
• Planning is crucial • Stakeholder expectations are key drivers• Management and employee buy-in and
involvement are paramount• Must be linked to and alignment with strategy
Define Performance Management
• Planning Performance• Maintaining Performance• Reviewing Performance• Rewarding of Performance
Process
Reward Performance:- Link to pay- Results = performance
PERFORMANCE MANAGEMENT
PROCESS
Business strategy, stakeholders, key economic wealth drivers
Reviewing Performance:- Formal reviews- Assess against objectives
Maintaining Performance:- Monitoring performance- Coaching- Feedback
Planning Performance:- Setting objectives- Outlining development plans- Getting commitment
A Model
• 80% of the process• Includes:
– Identifying key value drivers of stakeholders
– Defining Key Performance Areas (KPA’s)
– Defining Objectives
– Defining Targets
– Develop a training and development plan
Planning
• With no harbour, no wind will be the right wind.
• Between 92 to 97% of companies have a vision and some strategy statement.
• Only between 3-7% of staff know and work by it.
The Challenge of Alignment
A Model for Establishing/ Building an Aligned Performance Management Process
Deriving key value drivers from Strategic direction and KPA’S
Determining organisational objectives
Measuring & Evaluating performanceagainst organisational objectives
Reassessing and adjusting business strategy
Execution
Review
Determining and assigning KPA’s
Determining and assigning individualobjectives
Measuring, evaluating and rewarding Performance against individual
objectives
Reassessing KPA’s and adjusting Objectives to reinforce strategy
ORGANISATIONAL LEVEL INDIVIDUAL LEVEL
• S = Specific• M = Measurable• A = Agreed/Attainable• R = Realistic / Relevant• T = Time-bound
Setting Objectives
• A measurable component with a beginning and an end
• Starts with a VERB• Not in isolation
Setting Objectives
• Use a good-practice rating scale• Evidence-based• Both managers and employees - active
participants• Mutually agreed• Usually – bell curve
The Measurement
• Integration• Open Communication• Improved Performance• Training and Development• Clarity of Standards/Requirements• Placement of Individuals
Benefits
• Increased Objectivity• Remuneration• Promotability• Career planning
Benefits
• If you are not managing performance, what are you managing?
• Some key building blocks
Competencies Goal Setting Strategy Focus
Review Process
Feedback
Reward & Compensation
Training
Process Design
Success Factors Implementation
• Relevance• Reliability• Discriminability• Freedom from contamination• Practicality• Acceptability• Legal compliance
Success Factors Implementation
• Coaching & mentoring are crucial components of the Maintaining of Performance Phase
Coaching
Business strategy, stakeholders, key economic wealth drivers
Reward Performance:- Link to pay- Results = performance
Reviewing Performance:- Formal reviews- Assess against objectives
Maintaining Performance:- Monitoring performance- Coaching- Feedback
Planning Performance:- Setting objectives- Outlining development plans- Getting commitment
PERFORMANCE MANAGEMENT
PROCESS
Coaching is a formal process:
- A day- to-day process
- To improve performance and capabilities
Coaching = Give a man a fish a day, and you fed him for a day; teach him to fish, and you feed him for life.
Confucius
Coaching
• Give feedback • Ask for ideas and suggestions• Discuss • Coaching provides immediate feedback on
performance
Coaching
Coaching vs Mentoring vs Counselling vs Discipline?
Coaching
Group Discussion
Why do Managers Fail to Give Feedback?
• Lack of confidence• Avoiding confrontation• Do not have time• Lacking internal support• Others?
Why do Managers Fail to Give Feedback?
THE BECKS MODEL• Behaviour• Environment• Clarity• Knowledge/Skills
A Model for Performance
• Descriptive and specific• About something that can be changed• Timeous• Tactful• Confirmed
Good feedback is …
• What will other people think?• If you cannot say anything nice, do not say
anything.
Childhood and Feedback
Maximum Impact of Informal Performance Feedback on Employee Performance
0
10
20
30
40
50
Fairness andaccuracy
Managerknowledgable
about employeeperformance
Feedbackabout how todo job better
Emphasis onstrengths
Managervolunteersinformalfeedback
Detailed andspecific
feedback
Immediatefeedback
% change in performance
Impact on Feedback
Traditionalists Baby Boomers
Generation X Millennials
Feedback and Generations
Example Be specific and give actual examples
Effect Explain the impact/effect (positive or negative)
Change Suggest what should change (to improve performance)
Continue Recognise good performance (reinforce positive behaviour)
The ECC Model for Feedback
Example During the last two weeks you made a significant contribution to the customer service targets – you had no complaints and your turn-around time is 6% above target. On Friday you also made a good suggestion to improve customer service in the front-office area.
Effect We are doing great and we had very positive customer feedback in your area because of
your inputs and efforts.
Continue To focus on customer service and to share ideas around service excellence.
Good Performance Feedback – An Example
Example During the last two weeks you had 5 serious complaints from 3 important customers
regarding follow-ups. You also did not meet the required 5 hour-turn-around time on queries.
Effect We are under pressure from 3 major clients who represent a substantial revenue base. Your area is not meeting the required service standard. Your team members are frustrated, because they meet target, but overall the team is below target.
Change You will have to focus more on service and customer satisfaction and need to achieve an overall target of X% customer satisfaction for the next three months in order to meet target at the end of the quarter.
Good Performance Feedback – An Example
Welcome
Check expectations & concerns
Give feedback and use Facts
Get a Response
Ensure buy-in and understanding
Discuss and plan the next period
Identify training requirements
Express confidence
A Good Review
• What do you audit?• How do you audit Performance Management?• What can you expect?
Performance Audits Key Topics
Measures give rewards relevance, and rewards give measures meaning
TB Wilson
Performance and Reward
• What gets measured gets done• What gets rewarded is sustained• The majority of workers want recognition for
achievement• Rewards have a high retention value for
talent
Performance and Reward
Drivers Attraction & Retention of Talent
Dilemma’s in reward: • Objectivity• Transparency• Affordability• Baggage
Performance and Reward
Link to Pay
Why does it often fail?• Lack of objective and quantitative measures• Poor link between pay and performance (no
immediate reinforcement)• The aspects that get rewarded are not linked to
strategy• Poor communication re objectives, benefits and
procedures
Why does it often fail?• Level of reward not proportionate to effort• Resistance to change • Union perceptions and involvement
Link to Pay
A Reward Matrix
Rating 25th Percentile 50th percentile 75th Percentile
5 17% 15% 10%
4 15% 12% 8%
3 12% 10% 6%
2 0 0 0
1 0 0 0
Performance and Reward
• Guaranteed Package
• Short-Term Incentives
• Long-Term Incentives
X X X
X X X
X X
Att
ract
Reta
in
Perf
orm
an
ce
Ski
lls
REMUNERATIONCOMPONENT:
Performance and Reward
VariablePackage
FixedPackage
KEYIMPACT
KEYOBJECTIVE
Motivational DriveBehaviour
• Return on Bottom Line
• Reward specific behaviour/results
HygieneFactors
Competitivein Market
• Internal Equity
• Cost Management
• Flexibility
SECONDARYOBJECTIVES
The Psychology of Incentives
Talented individuals are mobile monopolies with global passports
Ridderstrale & Nordstrom
What is Talent?
• Expected to produce superior performance
• Talent apply knowledge, skills and creativity
• Focus on personal growth
• Challenge: To spot talent
What is Talent?
PROFIT
PASSION
PERFORMANCE
POTENTIAL
Why is it important?
Review
Key Elements
Link to Training & Development
Desired performance
Actual performance
Measurement
Development
VisionMissionStrategyValue Drivers
Key Challenges:• Strategy not always clear, defined or
formalised• Decisions are not taken to lower levels
(“family business” syndrome)
SMMEs
Key Challenges:• There often are:
– Little time– Few resources and finances– Little support– Not adequate skills– The “we do fine” syndrome
SMMEs
Challenges organisation’s face
Balanced Scorecards (BS)
9 out of 10 companies fail to execute and track
strategy
Management Barrier
85% of executive teams spend less than one hour/month
discussing strategy
Management Barrier
85% of executive teams spend less than one hour/month
discussing strategy
People Barrier
Only 25% of managers have incentives linked to strategy
People Barrier
Only 25% of managers have incentives linked to strategy
60% of organisations don’t link budgets to strategy
Resource Barrier
60% of organisations don’t link budgets to strategy
Resource Barrier
Vision Barrier
Only 5-10% of the work force understand the strategy
Vision Barrier
Only 5-10% of the work force understand the strategy
Challenges Faced by Organisations Making a Case for a Balanced Approach
At the highest conceptual level, the Balanced Scorecard is a framework that helps organisations translate strategy into Operational objectives that drive both behaviour and performance.
What is Balanced Scorecard?
The Balanced Scorecard converts strategy into an Integrated System defined across Four Business Perspectives
FINANCIAL FOCUS
CUSTOMER FOCUS EXTERNAL
INTERNAL PROCESSES
PEOPLE FOCUSINTERNAL
Profitability, Growth, Sales & Cash Flow
Retention, Market Share, Service, Etc
Response time, Costs, Effecient,Productivity
Skills, Learning,Development,Sustainability
Four Perspectives of a BS
VISION, MISSION &
VALUES
• Scorecards drive performance at all levels• Scorecards facilitates strategy• Scorecards focus on the right measures• Scorecards encourage balanced
performance
Reasons: Scorecard Approach
• Scorecards point out what’s missing• Scorecards encourage good management• Scorecards communicate - they tell the story
Reasons: Scorecard Approach
• “Balances” people, performance and processes
• Links historical, current and future objectives• Brings intangibles into the performance
equation• Enhances focus on strategy and
performance culture
The Balanced Scorecard
An Example of a BS
Financial: ShareholderObjectives:Realise stakeholder expectations/ liaison,Pricing, Resource utilisation, Optimise business opportunities: Optimise existing revenue sourcesTargets:Dividends, Sustained/contained tariffs,Benchmarks, Managed costs (resource utilisation)
Customer
Value Drivers: Price, Customer Care, Reliability
Objectives:Market-related pricing, Customer liaison (stakeholder engagement), Appropriate Customer services, Instilling a customer care cultureTargets:Surveys, Quality and frequency of contact, Identify and address customer needs
Processes
Value Drivers: Sustainability and Growth
Objectives:Optimise operational processes, Market segmentation, Identify new business opportunities in ports, Develop and grow infrastructureTargets:Benchmarked/best practice, Improvement, Worth of industries in Ports and Syncrolift
Learning & Growth
Value Drivers: Salary & Benefits, TrainingObjectives:Control and manage top management, Aligned HR strategy to Business Strategy, Benchmarking and best practice, Policies & procedures in place, Attraction of suitable skillsTargets:Established Performance Management, Potential assessment and development Plans, Skills Development Plan, Succession and Career Planning
Vision & Strategy
A Competency: SkillsKnowledgeTraits/Behaviours
Foundational Practical Reflexive
Skills Audit
Competencies
• Define competencies and a rating scale• Make it part of the PM process and
procedure (360o?)• Reward and recognise the desired
competencies
Competencies
Challenge 1:No alignment and a paper-driven exercise
Challenge 2:
Inadequate links between pay and performance
Challenges
Challenge 3:Link consequence management and performance Challenge 4:Managerial capacity and capability
Challenges
Thank You
Questions