I would like to extend a huge thank you to Layla Mansfield who created this blog posting and played an instrumental role in coordinating these events and ensuring the customer contestants were prepped and ready for their presentations! Enjoy!
Extensive research has shown that well designed employee performance management methods are clearly linked to business success 1. However, HR professionals, managers, and employees are often skeptical about the added value of performance management and many consider it as a set of bureaucratic practices 2. This skepticism has increased in recent years with many organizations changing or eliminating the practices they were using in the past 3. Yet, while many people are calling for the need to “fix” performance management, there is little consensus or clear direction on how to fix it 4. So while it is clear that the world of performance management is changing it is far less clear what works when it comes to making these changes.
Highlighting What Works
In 2015 SAP SuccessFactors created a new type of contest called the “Performance Management Throw down” to explore what effective performance management truly looks like. The PM Throw down, based on the cooking show of the same name, was initiated by a customer who wanted to highlight their current PM process and how these processes work for them, but also hear from other organizations on differing solutions and/or methods. This format created a friendly competition that allowed for an environment of knowledge sharing and proactive problem solving for all participating organizations and audience members. We loved the idea and decided to organize a series of Throw downs, all focused on what is working in performance management. Thirteen companies participated, with Allergan, Bank of America Merchant Services, Capital Group, ConAgra Foods, First American, Johns Hopkins Medical, Lowe’s, Micron, New York Life, Peabody Energy, TranSystems, Under Armour, and Wawa all competing to share their unique PM processes. Here’s a summary of how the Throw downs were structured:
- Four regional Throw downs were held in the West, South, East and Midwest with three to four organizations presenting how they utilize PM to drive positive business outcomes and highlighting practices that are particularly effective.
- Throw down audience members consisted of over 302 HR professionals from over 193 [LM1] different companies. These events were marketed to SAP SuccessFactors customers in each region where the competitions were held.
- Audience members voted for a winner at each regional throw down. The winners of each event were then invited to compete against each other at a National Throw down, which included a larger audience and a grand prize.
What we learned from the winners
Each of the Throw down participants had created a PM system that reflected the unique culture and goals of their organization. The main thing we learned from these presentations was that what defines the best PM process differs by organization, so what works for some may not work for others. However, we also saw several common features that were effective across the competing PM systems.
Ongoing feedback and coaching. All Throw down participants recognized the need for a more dynamic and ongoing feedback system. In some cases, companies were conducting appraisals on annual cycles but had integrated formal or informal check-ins throughout the performance period to increase just-in-time feedback. In other instances, organizations had moved away from the formal annual form to focus more heavily on quarterly check-ins. A major advantage for all companies utilizing more frequent feedback methods was increased transparency around standards and expectations. This transparency led to improved employee satisfaction, with many Throw down contestants reporting increased engagement scores and positive feedback about the PM system as a result of implementing this approach.
To rate or not to rate? The use of performance ratings was a key topic of discussion during the Throw downs. Related to the increased emphasis on ongoing, quality conversations, some of the Throw down participants were moving away from defining performance with a single rating. However, we found that this tended to be more nuanced than the approach suggested by recent headlines to “get rid of ratings” 5. For instance, we found that some Throw down participants were replacing their numeric ratings with more meaningful categories. In these cases employee performance was still being evaluated, but a lot of work was going into ensuring that the evaluation was meaningful to employees and was clearly defined and aligned with important organizational criteria. A few Throw down participants had removed overall performance ratings but retained ratings of individual goals or competencies. Other Throw down participants continued to utilize ratings in the traditional sense and found them to be effective. Regardless of rating approach, all Throw down participants emphasized that in order to effectively measure performance, engage employees, and make compensation and other employment decisions related to performance, it was imperative to ensure that the measurement methods were consistent and transparent.
Emphasis on training and change management. A number of the Throw down participants noted that they invest heavily in training. In one organization, managers were provided training in how to have performance discussions with low and high performers while employees were given training on how to receive and utilize feedback. Other participating organizations provided numerous resources to managers on how to hold impactful and useful conversations as well as how to make fair and accurate ratings.
Along with providing proper training, participants designed effective change management processes to ensure their PM systems would be adopted and valuable. One organization described their three-year process in implementing their new PM system with a strong emphasis on creating lasting behavioral change in the company. Another held focus groups with their employees to see what was working and what was not working, and designed their PM practices accordingly. We saw that several others implemented change within one department before rolling the system out to other departments. Regardless of approach, all participants recognized the role of well thought-out change management in driving adoption and effectiveness of PM.
Further, participants uniformly recognized the importance of leadership support in driving PM system adoption. Others implemented changes in the performance management processes of leaders in order to gain buy-in prior to the system change affecting the rest of the organization. All Throw down participants had secured leadership support and found that this support was crucial to creating a climate where PM was seen as a key strategic HR lever.
Efficient but effective. Several Throw down contestants emphasized that a performance management system that is too time consuming or difficult to administer creates barriers and decreases the probability that employees will see the value. This was a key outcome that many of the Throw down participants used when evaluating their current processes – is the system simple to use? To tackle this many of the participants had created training materials that could be accessed throughout the performance cycle, so resources were on hand as managers and employees needed them. Others had taken a holistic approach and removed or added steps in the process to streamline and add clarity. For example, by reducing the number of necessary steps in the process, one organization went from using over twenty different performance forms to under ten. Another organization added steps within the process to allow for ease of use and simplification when employees were rated by more than one manager.
By bringing our customers together to share their innovative performance management methods, the Throw downs allowed us to gain an insider’s perspective on what is working in PM. We were amazed by how creative and unique each organization was in getting their PM processes to meet their own organizational needs and goals.
Read more about our insights from the 2015 Performance Management Throw downs here. If you are an existing SAP SuccessFactors customer, you can access presentations on innovative PM practices from our contestants on the Customer Community: hear from Capital Group, ConAgra, John Hopkins, Micron, Under Armour, and Wawa.
References
- 1. Cascio, W. F. (2006). Global performance management systems. In I. Bjorkman & G. Stahl (Eds.), Handbook of Research in International Human Resources Management (pp. 176—196). London: Edward Elgar Ltd.
- 2. Aguinis, H., Joo, H. & Gottfredson, R. K. (2011). Why we hate performance management – and why we should love it. Business Horizons, 54, 503-507.
- 3. Rock, D., Davis, J., & Jones, B. (2014, Autumn). Kill your performance ratings. Strategy + Business, 76. http://www.strategy-business.com/article/00275?gko=c442b.
- 4. Steven T. Hunt (2015). There Is No Single Way to Fix Performance Management: What Works Well for One Company Can Fail Miserably in Another. Industrial and Organizational Psychology, 8, 130-139. doi:10.1017/iop.2015.11.
- 5. Rock, D. and Jones, B. (2015, September, 8). Why more and more companies are ditching performance ratings. Harvard Business Review. https://hbr.org/2015/09/why-more-and-more-companies-are-ditching-performance-ratings.
[LM1]Includes success connect
