Performance Management: Moving from Scorecard to Strategic Tool

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Performance Management Moving from Scorecard to
Strategic Tool

• October 20, 2009

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Defining the What and The Why

• What is Talent Management?
• Managing our highest incurred cost of doing
  business our people . . .
• Recruitment
• Selection
• Training
• Performance Management
• Professional Development
• Succession Planning
• Retention of Talent

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Why Performance Management?

• Functions as core of all other TM processes and
  creates a holistic approach
• Impacts the entire employee lifecycle and
  provides purpose for each stage of the employees
  individual experience
• Provides metrics for individual accountability,
  goal alignment and business objectives
  integration
• Enriches the employees through coaching and
  individual development planning

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• OnPoint Consulting Research Analysis

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Questions We Set Out to Answer

• What are the obstacles that prevent performance
  management systems from achieving their intended
  objectives?
• What impacts the perception that a performance
  management system is fair and accurate?
• What factors determine if a performance
  management system delivers value to the business?
• What characteristics differentiate the best
  performance management systems from those that
  are less effective?
• Which changes are likely to have the greatest
  impact on improving a performance management
  system? And which may not be worth the effort?

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Sample of Responding Companies

• ATT
• Caterpillar Inc.
• Church Dwight Company, Inc.
• EDO Corporation
• Erie Insurance Group
• FedEx Kinkos
• Fujifilm USA
• Johnson Johnson
• JPMorgan Chase Co.
• Lockheed Martin
• Pitney Bowes
• Playtex Products, Inc.

• Praxair, Inc.
• Raytheon Electronics Corporation
• Reliant Pharmaceuticals
• Siemens Medical Solutions
• United Technologies Corporation
• Verizon
• Wyeth Biotech

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PM Scorecard or Strategic Tool?

• Only 44 of line managers and 45 of HR
  professionals believe their current performance
  management systems deliver value.
• Only 43 of line managers and 46 of HR
  professionals believe the time spent on their
  performance management systems is worth the
  investment.
• Only 30 believe that their performance
  management systems achieve their intended
  objectives.
• The good news? 75 believe it is possible to
  create a fair and accurate system.

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Why Are People Dissatisfied?

• Managers do not apply it consistently
• Managers lack the skills required
• Leadership is not committed to developing people
• Managers do not address poor performance
• There are no consequences for not using the
  system and developing people

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Dissatisfaction Leads to Changes, Yet

• Despite the wide range and high frequency of
  reported improvement efforts, only 24 believe
  the changes have actually improved their systems.
• Most commonly reported changes directed toward
  revising the rating scale, updating competencies,
  and adopting new forms.

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Six Critical Factors of a Solid PM System

• What contributes to the perception of fairness,
  accuracy, and overall value to the business?
• The system helps employees build their skills and
  competencies.
• The system is applied consistently across the
  company (e.g., managers set goals with employees,
  there is a shared picture of the criteria used to
  evaluate performance, etc.).
• The rating scale enables managers to accurately
  differentiate levels of performance during the
  annual reviews.
• The system helps to build a high-performance
  culture.
• The system provides useful data that is used for
  succession planning.
• The system provides useful data that drives
  leadership development initiatives.

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Six Critical Factors Are Often Not in Place
Helps employees build their skills and
competencies Consistent application across the
company Rating scale enables managers to
differentiate levels of performance
accurately Helps to build a high-performance
culture Provides useful data for succession
planning Provides useful data that drives
leadership development initiatives
Note Ratings of Agree or Strongly Agree are
labeled as favorable, and Disagree or Strongly
Disagree as unfavorable.
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The Issue No Connectivity
FOCUS OF IMPROVEMENT EFFORTS
OBSTACLES
SUCCESS FACTORS
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Three Prerequisites for Success

• Mindset Performance management is seen as a tool
  to drive results, not as an administrative task.
• Competence Managers are skilled at goal setting,
  coaching, development planning, and appraisal.
• Reinforcement Managers meet periodically with
  direct reports to formally review progress.

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Guidelines to Enhance Your PM System

• Choose an approach and stay with it
• Clarify the purpose of your PM system
• Improve consistency
• Provide descriptions of what good looks like
• Require evidence to support ratings
• Provide managers with skill training
• Ensure performance management system data is
  linked to other talent management systems
• Hold managers accountable
• Emphasize setting clear and measurable goals and
  providing ongoing coaching and feedback
• Prioritize development planning

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RNDC Setting the Stage

• 2007 Merger Republic Beverage Company National
  Distributing Company
• HR processes were different, decentralized,
  tactical, and inconsistently executed across 2
  companies
• First priority . . . position HR as a strategic
  function and business partner at RNDC
• Why? HR needed a roadmap in order to meet the
  business challenges
• How? Conduct a HR SWOT on the HR function and the
  business in order to present a fact-based
  business case and strategic people plan for RNDC

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The Owners State the Business Challenges . . .
Step 1 Understand the Business Challenges and
Vision (May 2007)

• Maximize Shareholder Value
• Expand Supplier Relationships
• Attract, Develop, and Retain the Best Talent
• Execute Competently
• Become an Extraordinarily Professional
  Organization

To be the national distributor of choice of
beverage alcohol producers who value the three
tier system, building branded products and
profitability for all parties involved, and
serving the needs of our associates, suppliers,
customers and community.
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Step 2 Understand HR at the New Company- HR
SWOT (June Sept 2007)

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HR SWOT Revealed a Strategic Role for HR and a
Need for a Talent Management Program

• What did the HR SWOT reveal?
• RNDC was a growing organization with naturally
  strong human capital. We had the opportunity to
  implement a strategic human capital management
  plan which could offset the threat of competitive
  intrusion and help us in future growth.
• The right strategic human capital management plan
  could also address and solve the business
  challenges
• Attract, Develop, and Retain the Best Talent
• Execute Competently
• Become an Extraordinarily Professional
  Organization

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Overarching, 1 Objective Post-Merger

• Implement and Execute a Three-Year
• Talent Management Plan that
• . . . delivers an A in
• Talent Management

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Prioritize a Practical Approach

• Phase 1 (2007) Introduction of a Talent
  Management Program with a leadership competency
  based foundation
• Phase 2 (2007 - 2008) Launch an integrated and
  web-based Talent Management Program to connect
  and standardize all the talent practices
• Phase 3 (2008-2009) Execute and establish best
  practices and processes through education and use
  of technology.
• Phase 4 (2009 2010) Repeat performance of best
  practices and evaluation of human capital
  management (ROI)

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2007

• Phase 1 Creating the Framework Leadership
  Competency Model and Communicating the Criticality

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The Beginning Phase . . .

• What was the starting point? Senior leader buy-in
  and sponsorship for a competency-based talent
  management system and its integration to
• Recruitment and Selection
• Performance Management
• Training and Development
• Succession Planning
• Retention of Talent by Creating a RNDC Culture
• Human Capital Management (metrics for ROI)

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Steps in the LCM Development

• Senior leaders identified a leadership steering
  committee with members from both legacy companies
  and each function
• TalentQuest facilitated an executive
  brainstorming session on competency-based talent
  management systems
• Outcome was alignment on an action plan to create
  the RNDC LCMs from the point of research to
  implementation

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Steps in the LCM Development

• Identified and interviewed top talent subject
  matter experts inside RNDC to evaluate
  success-driving behaviors
• Surveyed the entire Company to rank competencies
  and behaviors for (1) their job and (2) their
  supervisors job
• Steering Committee reviewed survey results and
  proposed the RNDC LCMs to senior leaders and
  Owners

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RNDC Leadership Competency Models (9)

• Manager (all Positions)
• Implement Continuous Improvement
• Think Critically
• Focus on Profitability
• Manage Execution
• Collaborate Broadly
• Establish Priorities
• Attract, Coach, and Promote Talent
• Motivate Others
• Communicate Effectively
• Negotiate Conflict
• Demonstrate Professionalism
• Create Customer Satisfaction
• Build Supplier Satisfaction

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Steps in the LCM Development

• Began a communication cascade to the Company on
  the new RNDC LCMs and their importance to the
  business strategy and talent management
• Started with Managers and functional leaders and
  ended with Individual Contributors
• Immediately test-drove the LCMs with a formal
  performance management program our first TM
  process at the new company

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Steps in the LCM Development

• After the first performance appraisal process, we
  asked the field 2 questions on performance
  management.
• What did you appreciate about the process?
• Consistent and relevant to the job
• Use of technology versus paper
• What could make the process more effective?
• Reduce the number of leadership competencies
• Incorporate specific performance objectives

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Steps in the LCM Development

• Streamlined the LCM for each position . . .
  continued to use the Steering Committee as
  calibration.

• Manager (All Positions)
• Implement Continuous Improvement
• Negotiate Conflict Through Collaboration
• Manage Execution to Attain Results
• Focus on Profitability
• Attract, Coach, and Promote Talent
• Demonstrate Professionalism
• Create Customer Satisfaction
• Build Supplier Satisfaction (Sales Ops)
• Think Critically (Admin)

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2007 - 2008

• Phase 2 Launch an integrated and web-based
  Talent Management Program to connect and
  standardize all the talent practices

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Integration of LCM into Core Talent Management
Practices at RNDC

• Launched Technology
• Taleo ATS
• TalentQuest TMS
• Selection Assessments
• Objectives Management
• Performance Management
• 360 Process
• Development Resource Library
• Culture Engagement Surveys (2010)
• LMS (2010)

• Recruitment Tools Branding Message
• Selection Tools
• Job Descriptions
• Training Programs
• Succession Planning
• Professional Development Programs
• Corporate Communications
• Supplier Contract Negotiations as a point of
  differentiation

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Example Selection

• Leadership Competency Model was incorporated into
  talent selection
• Job Descriptions
• Job Postings
• Selection Assessments
• Structured Interview Guides
• Selection Training

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Example Performance Management

• 2007 - 2008
• Executive Steering Committee involved
• LCM introduced
• HR Technology introduced
• Common practice introduced
• IDPs introduced for all
• Extensive workforce communication and training
• Full diagnosis after the process for quality
  improvement

• 2008 - 2009
• Simplified LCM launched
• HR Technology improved and simplified
• Objectives Management introduced and incorporated
• Metric analysis introduced and used to develop
  Basic Management Training Program
• Elevated communication on process connection to
  the TM strategy
• Pay-for-Performance introduced
• Full diagnosis after the process for continual
  improvement

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Example First-Time Manager Training Program
Driven by PA Metrics and Connected to LCM
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Example Succession Planning

• A Talent (high-potential) standards were
  established and incorporated both the Leadership
  Competencies and Performance Management
  disciplines in order to assess and develop top
  talent.

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Example Succession Planning

• Leadership Competency Model behaviors are part
  of the Talent Assessment process.
• Manager evaluates leadership behaviors (60) of
  each competency (8) for a total rating.
• Total rating must be 65 of max points (year 1
  with bar raised each year).

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Example Succession Planning

• If all 7 requirements are met, a formal
• Development Plan is prepared for A
• (and strong B) talent.
• Focus on leadership competencies that need
  further development for the current position or
  the next position.
• Professional development and/or training is
  generally connected to building competency
  levels.
• Individual Development still happens
• as part of the formal Performance
• Management process with all
• associates.

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2009

• Phase 3 Execute and establish best practices
  and processes through education and use of
  technology

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RNDC Core Talent Management Practices Today

• Company and industry-specific LCM
• Recruitment and Employment Branding Message
• Recruitment and Selection Tools
• Comprehensive College Recruitment Program
• Onboarding, Assimilation, and Transition Process
  for Key Positions Managers
• Objectives Management connected to . . .
  Performance Management
• Basic Management Training Program (based on PM
  metrics)
• Succession Planning . . . Talent Assessment
  Process with IDPs and Formal Talent Reviews. 90
  Promote-from-Within Rate.
• Development Plans for Every Associate
  performance management program and/or succession
  planning
• 360 Feedback Process
• Executive Coaches focused on hipo talent
• Created a formal womens professional development
  initiative

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RNDC Core Talent Management Practices Today

• Execution Standpoint of HR Practices
• Supported by top leaders and managers . . . and
  understood by general workforce
• Consistent and standardized
• Subject to continuous improvement
• Training and communication happens with every
  process, every time
• Perceived and real improvements with HR
  technology solutions
• Most importantly, linked to other TM disciplines
  and its part of the RNDC culture

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2009 into 2010

• Phase 4 Repeat performance of best practices and
  evaluation of human capital management (ROI)

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Final Phases of Original Plan

• In-progress evaluation of
• Human capital metrics through a HR scorecard
  (pilot)
• HR Technology (integration)
• Improved Management Training Curriculum
• 2010 HR processes just do it better!
• Preparing for the next 3 years . . . Execute a
  similar process starting with a HR SWOT

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3 Years Later What Worked!

• Senior Leader buy-in, engagement,
  accountability.
• Include the end-user every step of the way.
• Full workforce education no secrets!
• Formal training on every single process starting
  with HR.
• Articulated the connection of each process to the
  cycle of talent management we told the why.
• Executed with discipline and listened with care.
• Fixed the problems. And, raised the bar.
• Stuck with the game plan and flexed, as needed.

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3 Years Later Watch outs!

• Competing priorities in an ever-changing business
  environment in the industry.
• Unplanned surprises like the economy (impacts
  growth and financial investment in people)
• Technology scares Managers continue to
  emphasize the advantages.
• If you stop talking about talent, talent stops
  talking to you!

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In Conclusion Realizing the Strategic Role for
HR and its Need for a Talent Management Program

• What did the HR SWOT reveal?
• RNDC was a growing organization with naturally
  strong human capital. We had the opportunity to
  implement a strategic human capital management
  plan which could offset the threat of competitive
  intrusion and help us in future growth.
• The right strategic human capital management plan
  ABSOLUTELY DID address and solve the business
  challenges
• Attract, Develop, and Retain the Best Talent
• Execute Competently
• Become an Extraordinarily Professional
  Organization

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• Questions?

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Appendix Slides
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The RNDC Competency Model Fuels Talent Management

• RNDC Talent Management the ability to attract,
  develop, and retain talent.
• Key business challenge.
• Core Competency Requirement.

• RNDC Employment Branding . . . Who We Are
• Taleo Applicant Tracking System (automates hiring
  processes)
• RNDC Career Web Site
• Internal Job Posting Processes

• TQ Assessments and SIGs
• RNDC Selection Toolkit

• TQ Strategic Planning Objectives Integration
• To Performance Management
• Measuring HR Effectiveness (turnover,
• Retention, time to fill jobs, cost per hire).

2007-2008
2007-2008
2008-2009

• New Hire Orientation
• Progressive Training Programs
• - - Onboarding Transition Process
• - - New Supervisor Training
• - - New Manager Training
• Management Academy
• Functional Training
• - - Sales
• - - Operations
• - - Administration

• TQ Survey Module
• Culture Action Plans

2008-2009
2008-2009
2007
2008-2009
2007-2008
2008-2009

• TQ Succession Planning Module
• Formal CDP Events
• Local Bench Planning

• TQ Performance Appraisals (integrated
• with objective management)
• Coaching Performance Issues

• TQ 360 Survey Tool
• Individual Development Plans
• Leadership Programs (external)
• Future Leadership University (internal)
• TQ Learning Center

TQ TalentQuest Technology
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RNDC Execution Best Practices

• Build a calendar of succession events to ensure
  coordination across company processes
• Pilot in a Region/State/Several Houses
• Provide toolkits and rollout support resources,
  making roles and responsibilities clear
• Identify a high potential pool in addition to
  identifying levels of readiness
• Solicit feedback and improve the system in Y2