1、1Executive Human Resource ProgramThe Promise of Performance ManagementHay GroupBoston 2The Current Challenge of Performance ManagementThe HR processn Is completely unrelated to other key business processesn Is dreaded by managers and employees aliken Does not result in any meaningful feedbackn Does
2、not differentiate performance or payn Is a focus for only one or two daysor hoursper year3The Promise of Performance ManagementImagine a system that couldn Increase the likelihood that your strategy is effectively executedn Harness and direct the 1060 minutes a day of discretionary effort that every
3、 one of your employees hasn Rationalize and focus the number of goals that anyone in your organization hasn Improve the decisive dialogue that occurs in your organizationn Reward performance in a way that it is motivating and engages peoplen Differentiate performance in ways that make line managers
4、feel good about their decisions4PerformanceNumber of EmployeesSource: Hay/McBerOptimizing the performance of your people will have a positive impact on business performanceImproving Performance Management Improves Business Results5Percentage of variation in change in company performance accounted fo
5、r by managerial practices19%2%1% 1%6%18%3%1%1%8%0%10%20%30%40%ProfitabilityProductivityHRMStrategyQualityTechnologyR&DSource: Sheffield Effectiveness ProgrammeHuman Resource Management Practices Drive Profitability and Productivity6Highly Successful Companies are defined as havingn5-year sales g
6、rowth = 17.5% per yearn5-year profit growth = 10.8% per yearnAnnual equity growth = 16.7% per yearn5-year dividend growth = 13.4% per yearSource: D. Karvetz, The Human Resources RevolutionClear Employee GoalsParticipative StyleAttention to DevelopmentEncourage CreativityPerformance-Based RewardsHigh
7、ly SuccessfulCompaniesLess SuccessfulCompanies80%70%67%62%86%26%4%27%10%30%High-performing companies are better at managing, motivating, and rewarding employeesImproving Performance Management Improves Business Results7Source: Mavrinac & Siesfield, Measuring Intangible InvestmentStrategy Executi
8、on Matters to ShareholdersThirty-five percent of an institutional investors valuation of a company is attributable to nonfinancial information that gauges the ability of the management team to deliver results:nStrategy Execution: Can management make tough decisions and seize opportunities quickly?nM
9、anagement Credibility: Does the company keep its commitments?nStrategy Quality: Is managements vision of the future likely to optimize value creation in a volatile, globalized, and connected economy?nInnovativeness: How readily does this company adapt?nAttracting and Retaining Talent: Is turnover hi
10、gher or lower than key competitors? Do new hires surpass leavers in skills and experience?nManagement Experience: What skills and experiences does the management team bring to the table?nCompensation: Do compensation policies support the firms strategic intent?835% improvement in human-capital syste
11、ms resulted in 10%20% gain in shareholder valueAlignment and Integration of HR System“Human Capital” Enhancements290310330350370390020406080100Quintile Improvements in Strategic Market Value per Employee (000)Source: Huselid and Baker, 1995Human Capital Systems Increase Shareholder Value9Improving P
12、erformance Management Improves Business Resultsn High-performance companies define Performance Management in its broadest sense: it is critical to executing and implementing strategyn Performance Management is now widely recognized as delivering more returns and delivering more competitive advantage
13、s than other HR investments n Performance Management is the key to “raising the bar” in an organization, for all levels of performancen Organizations with a high-performance orientation and strong management capability have higher revenue, profits, and market valuations 10Performance Managementn Per
14、formance Management is about improving business performance by improving team and individual performance, and ensuring that the companys strategy is executed and implemented. It islA process that ensures that people execute the strategy of the organizationlA process for establishing a shared underst
15、anding of what is to be achieved and howlA process for ensuring that decisive and constructive dialogue occurslA process of managing self and others so that people do achievelA process for ensuring that people are doing the right things in the most effective ways, to the best of their ability11Perfo
16、rmance Management StagesDesign ParameterPerformance AppraisalPerformance ManagementPerformance OwnershipHuman Resources“Check the box”compliance-orientedManage poor performersPassiveReport card(retrospective)Managers and Human ResourcesEvaluation reward emphasisManage the tails of bell curveJoint ow
17、nership for goal-setting/reviewBarometer of progress (periodic)Employees, managers, and leadershipStrategic clarity, coaching, dialogueRaise performance of organizationShared accountability for resultsDialogue (continual)FunctionRole of EmployeeFocusEmphasesOwnership12Performance AppraisalPerformanc
18、e ManagementManaging PerformanceHighLowLowHighImpact on ResultsLevel of Organizational CommitmentImproved business results require organizational commitmentCommitment to achieve company goalsGood setting and reviewMerit increases efficiently allocatedPerformance Management Stages this13The performan
19、ce management model is not new, but the way in which leading organizations do it is very different&DialogueDialogueDialogueDialogueBest Practices14Best PracticesWhats Different?There are four differentiators of best practice:n Clear Strategy Translation Processn Integrated Performance Processesn
20、 Culture of Dialoguen Multiple and Differentiated Rewards 15Strategy Translation ProcessA Definition:“Early in the history of the company, while thinking about how a company like this should be managed, I kept getting back to one concept: if we could simply get everyone to agree on what our objectiv
21、es were and to understand what we are trying to do, then we could turn everybody loose and they would move along in a common direction.” Dave Packard16Strategy Translation ProcessChecklist:o Are all top team members unified and focused on the “must-win” battles of the organization?o Are the interdep
22、endencies clear between the top-team members?o Are the middle managers clear on the “must-win” battles?o Do employees know what they need to do for the organization to be successful?lFinancial goals, operational goals, behaviors17Integrated Performance ProcessesA Definition:“Leaders must see to it t
23、hat the organizations social operating mechanismsthat is, the executive committee meetings, budget and strategy reviews, and other situations through which people do businesshave honest dialogue at their center. These mechanisms set the stage. Tightly linked and consistently practiced, they establis
24、h clear lines of accountability for making decisions and executing them.” Ram Charam, HBR 4/200118Integrated Performance ProcessesChecklist:o Do the goals of the organization reflect interdepartmental objectives?o Are the financial, operational, and people processes integrated?o Is the information f
25、rom these processes used to make business decisions?o Are the processes efficient and effective?19Culture of DialogueA Definition:“A leader should be constructing his appraisal all year long and giving his appraisal all year long. You have 20, 30, 60 opportunities a year to share your observations.
26、If, at the end of the year, someone is truly surprised by what you have to say, that is a failure of leadershipBy failing to provide honest feedback, leaders cheat their people by depriving them of the information that they need to improve.Critical feedback is the “heavy lifting” of leadership” EDSs
27、 Dick Brown20Typically a new employees productivity curve increases quickly, then levels offWithout reinforcement and feedback the level stays the same or may fall offSporadic, inappropriate, or general feedback without reinforcement has a distinctive effect on motivation and performanceConsistent,
28、specific feedback and dialogue build self-esteem and performanceFeedbackFeedbackFeedbackFeedbackCulture of DialoguePerformance Coaching/Feedback Is Critical21Culture of DialogueChecklist:o Are managers (and employees) trained in and good at performance dialogue?o Are managers selected and held accou
29、ntable for performance coaching?o Are coaching behaviors “l(fā)ived” by the leaders of the organization?o Is the dialogue open, informal, and candid, and does it provide closure?22The better my performance, the better my total compensation will beMultiple and Differentiated Rewards35%27%38%0%10%20%30%40
30、%AgreeNeutralDisagreeWhen most employees, even the stars, get the same pay, it reduces clarity about what good performance looks likeSource: Hay Group23Multiple and Differentiated RewardsApproaches:n Increase dialoguen Use multiple currenciesn Review use of ratingsn Use forced rankingsn Find new way
31、s to differentiate merit24Differentiated RewardsSeparate means from endsTactics/StrategiesBehaviorsTrainingTrainingTrainingTrainingTactics/StrategiesBehaviorsTrainingTrainingObjectivesEnablersConduct analysis of why OT is so high; develop strategy to reduce OT; implement strategyImplement 3 programs
32、 aimed at increasing customer satisfaction: begin training programs; upgrade call center software; establish a monitoring programSet high goals for yourself and for the team: try to reduce from 50 to 30 per month; communicate to team what needs to be done; “own” this processIdentify customer issues:
33、 think about and act on opportunities to address these issues; act as a role model to subordinatesshow them how to work with customers; improve call-center software systemTrainingTrainingTactics/StrategiesBehaviorsDevelop a plan to meet with each of your subordinates and get the “pulse” on how they
34、are doing (re: jobs, projects, expectations); develop career-pathing plans with each of your subordinates; develop ideas around nonmonetary rewardsCoach consistently: deliver timely and constructive feedback; address issues immediately; make sure others contribute and have what they need to do the j
35、obTactics/StrategiesBehaviorsBusiness ObjectivesCareer Development ObjectivesImprove consistency of customers delivery (evidenced by 98% customer satisfaction)Goals set for yearImprove employee retention in department by 50%Goals set for next 8 monthsReduce overtime from 150 to 50 hours/month (cost
36、not to exceed $12,000)Goals set for year25Extent ofDifferentiation1.Company wide success measures Company revenue Profit ability measures None None2.Business unit success measures Unit revenue Profitability measures Other measures Annual incentive Some, based on individual contribution3.Success meas
37、urescurrent role Contribution to unit/company measures Salary increase Little4.Requirementscurrent role Meet “current” job description Live the values None None5.Success measuresfuture roles Demonstration of success competencies/behaviors Achievement of development goals Future earnings Salary Annua
38、l incentive Long-term incentive Recognition Significant, based on potentialMeasuresFirst-Level ManagersRewardLinkage1.Company-wide success measures Company revenue Profitability measures Long-term incentive Annual incentive Some, based on role Some, based on role2.Business unit success measures Unit
39、 revenue Profitability measures Other measures Annual incentive Significant, based on unit performance3.Success measurescurrent role Contribution to unit/company measures Annual incentive Some discretionarycomponent4.Requirementscurrent role Meet current job description Live the values None None5.Su
40、ccess measuresfuture roles Demonstration of success competencies/behaviors Achievement of development goals Future earnings Salary Annual incentive Long-term incentive Recognition Significant, based on potential Salary increase tied to market movement LittleMeasuresExecutivesRewardLinkageExtent ofDifferent
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