innovation in performance management june 25, 2011 1

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INNOVATION IN PERFORMANCE MANAGEMENT

June 25, 2011

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Discussion

Innovation as key to enhance performance What is innovation Need for innovation, performance management as an enabler

Performance Management - Context: What is performance management. Need for performance management system Distinction between performance appraisal and performance management

Issues and perceptions about performance management system Perception of performance management Understanding gaps

Key drivers in effective performance management system Aligning employee performance to organizational goals Role of motivation, metrics, culture and employee development in performance management

Summing up: Practical aspects in making performance management work resulting in high employee

performance

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Innovation Innovation – new ways of thinking and doing things

From Industrial age to information age to innovation age

Innovation

- Predictable outlook- Customers have limited choices- Long life cycles- High entry costs to markets- Physical resources drive value- Innovative in internal

- Unpredictable outlook- Customers have multiple choices- Short life cycles- Low entry costs- Intangible resources drive value- Innovation is collaborative

1980 1990 2000 2010 2030

Steady, continuous change Unpredictable, discontinuous change

INDUSTRIAL AGE INNOVATION AGEINFORMATION AGE

(Jeremy Hope: Performance Management in the innovation age: An introduction)

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Need for Innovation Innovation as a necessity:

Change in market demands new ways of response Apple, Microsoft, Google, Cisco, GE etc., Airbus and Boeing. Airbus’s A380 as response to Boeing’s 747

Need for speed and rapid response for threats and opportunities Boeing’s change in policies and practices in execution of 787 dream liner

Innovation

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What is Performance Management Context

Performance Management

- Creates direction for the organization by aligning employee expectations with organizational needs

- Clarity on employee deliverables, rewards and roadmap for employee development.

- Facilitates continuous dialogue among manager, employee and the organization

Performance Management is a continuous process of driving employee effectiveness and facilitating his / her development thereby resulting in organizational success

Need for Performance Management

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Context

Performance appraisal is a subset of performance management process.

While performance appraisal concentrates on setting / reviewing and rating of goals, performance management is a continuous process by linking other HR systems like rewards, career planning / development

Emphasis of performance appraisal is on performance aspect of employee while performance management concentrates on performance, social and motivational aspects and the impact they have on the organization

Performance Appraisal and Performance Management

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Perception of Performance Management Perception

Another HR driven activity forced upon managers. Tedious forms and templates with no concrete value outcomes.

A process which is often top down and has limited correlation to rewards and development

Outdated, mere formality and usually results in more heartburn. A process that creates rift within teams as it force-fits employee performance and does not account for emotions

Lack of alignment of what employee perceives / values against organizational realties / goals.

Performance management as a stand alone process without pre-requisite and integrating aspects like organization culture, employee motivation, behaviors etc.,

Understanding Gaps

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Drivers for effective Performance Management Drivers

PERFORMANCE MANAGEMENT

Quality of Performance

Appraisal

Motivation and Rewards

Employee Development

Organizational Culture

Managerial Capability

Performance Metrics and

Accountability

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Appraisal






Accountability

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Quality of Performance Appraisal

Alignment of employee goals with organizational objectives

Clarity of performance expectations and deliverables. Distinction between goals and activities

Continuous dialogue between manager and subordinate as against bi-annual formality

Drivers

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Goal Alignment: Top Down approach Drivers

Organization Goals

Unit Level Goals

Unit Level Goals

Team level goals

Team level goals

Individual Goals

Individual Goals

Individual Goals

Individual Goals

Team level goals

Individual Goals

Individual Goals

Team level goals

Organization dictates goals. A set strategy is translated into actions

What is good for organization is good for employee

What to do is already decided. Managers are only expected to implement

Not the best model for creativity and innovation

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Performance goal setting – Collaborative approach

Organization Goals

Unit Level Goals

Unit Level Goals

Team level goals

Team level goals

Individual Goals

Individual Goals

Individual Goals

Individual Goals

Team level goals

Individual Goals

Individual Goals

Team level goals

Employee has a say, give and take approach

Alignment of personal goals with broader objectives

Enhanced ownership and accountability

Facilitates participation in organization building

Drivers

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Appraisal





Accountability


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Motivation as a key element of Performance Management system. Employee satisfaction and commitment affect performance

Workplace system where employees have greater discretion to think, act and contribute to overall work. (Theory Y)

Inviting people to play bigger and important roles and explaining to subordinates “why something must be done” acts as motivating factor to enhance performance

(Linda Hill, Harvard Business School)

Employees must believe that their effort will lead to overall success and in turn will lead to valued personal outcomes (Vroom’s Expectancy theory)

Drivers

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Role of intrinsic and extrinsic rewards in effective performance management system

Intrinsic Rewards as superior motivating tool Growth Recognition Quality of work Sense of achievement

(Frederick Herzberg, “One more time: How do you motivate employees?” (HBR classic), Harvard Business Review, January 2003.)

Drivers

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Appraisal





Accountability


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Being a “right” manager more important than being “nice” manager

Ability of manager in having “continuous dialogue” is critical for success of performance management process

Manager as a “coach” rather than as “command – control” authority Telling versus exploring Directing versus facilitating Authority versus Partnership

(Performance Management: Measure and improve effectiveness of your employees: Harvard Business Essentials)

Drivers

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Appraisal





Accountability


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The concept of “Necessary and Sufficient conditions” in employee develop interventions Traditional Training approach versus “decision science”

(John W. Boudreau and Peter M. Ramstad, Tapping the full potential of HRIS: Shifting the HR paradigm from Service Delivery to a Talent Decision Science”)

Individual development results in higher motivation, leading to enhanced performance resulting in overall organizational effectiveness

Necessary and sufficient conditions for individual development

Drivers

Development Conditions in learners

Learners must

Insight Know what they need to develop

Motivation Be willing to invest the time and energy required to develop themselves

New Knowledge Know how to acquire the new capabilities required

Real world practice Receive and use opportunities to try new skills at work

Accountability Internalize new capabilities to improve performance and results

Mary Dee Hicks and David B. Peterson, “The Development Pipeline,” Knowledge Management Review July – Aug 1999

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Appraisal






Accountability

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Performance Metrics and Accountability

Lack of transparency, inconsistency in rakings / ratings major source of demotivation

Measure what is “critical” and not what is “easy to measure” Ex: Bottom line performance as a goal but compromising integrity as a value?

Measure those which have maximum impact and effectiveness on performance rather than generic measures Ex: Turnover metrics. Importance of turnover of experienced and critical role

holders against overall turnover

Importance of “means to achieve the goals” in addition to “end objective”

Critical qualitative metrics for consideration Behaviors and competencies Values of the Organization Nurturing performers and creating leaders for the future

Drivers

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Appraisal





Accountability


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Culture as “taken for granted, shared, tacit ways of perceiving, thinking and reacting” (Edgar Schein)

Culture as “building block” to organizational performance and includes norms, values, beliefs, assumptions and behavior pattern of employees

Culture as enabling factor for performance Empowerment as against command and control Means as important as outcomes Team versus individual focus Customer centric as against internal focus

Drivers

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First Steps in making Performance Management WorkSumming up



Appraisal






Accountability

Encourage regular conversations and dialogue between manager and employee

Focus on intrinsic aspects of employee motivation and create individual plans in partnership with line manager

Be a coach to line manager. Make them accountable for “people management” outcomes. Nurture leadership

Understand which programs have maximum impact on performance and measure its impact

Champion culture of trust and empowerment with clarity on deliverables and accountabilities

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THANK YOU

innovation in performance management june 25, 2011 1

Documents

performance management

performance management

performance management

high employee performance

performance aspect of

context performance

employee development

innovation need