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Aryaduta Hotel-Jakarta, 14 August 2014By Yunus Triyonggo
HR Practitioner
Why Traditional Performance Management Can't Deliver Peak Performance
Daniel D. Elash, Ph.D. (2009)
5 Reasons
What is Traditional Performance Management ?
Source : David D. Dubois & William J. Rothwell, 2004
Traditionally, performance management systems
concentrate on performance planning and
evaluation, rewards and discipline, according to the
2000 Performance Management Survey (2000)
Reason #1
• They are too slow.
– To be truly educational, feedback has to occur at the speed of business circumstances.
– It is most powerful when it follows directly on the heels of performance.
– When feedback is fresh it can be more deeply discussed, considered, and incorporated in a timely fashion.
Reason #2
They are too remote
– Too often the voices of customers,
teammates and co-workers are
filtered and delivered through the manager.
– Managers can't effectively explain or clarify issues and situations with which they aren't familiar.
– Placing the manager between teammates often reduces the ability of teammates to talk directly to each other
Reason #3
They are too vague (samar-samar)– Useful feedback is specific, focused,
actionable, and relevant to a particular
situation or set of circumstances.
– This requires a level of explicitness that is seldom reached with current performance management systems, which rely on annual, or bi-annual performance reviews.
– Evaluated dimensions are often broad behavioral categories such as "responsible," "reliable" and "industrious." Such terms open the door for heated debates about their exact meanings in specific situations.
Reason #4They are too emotionally laden (sarat)
– The mind is best prepared to grasp new information, think effectively and learn when it is clear and focused.
– Understanding, thinking and learning are more complicated when a person is anxious, self-conscious, angry or defensive.
Reason #5
They are too focused on each individual alone
– Optimizing your own performance without regard to your impact on others, or the synergies required for effective teamwork, is insufficient today.
– A successful company isn't a collection of individuals performing independently; it is a networked, interdependent system that operates as an organic whole.
– Feedback has to relate to individuals, but within the context of the whole interdependent system.
Challenges
0%
100%
200%
300%
400%
1997 2012
Complexity
However, according to a study by The Boston Consulting Group (BCG), business complexity has increased between 50 percent and 350
percent over the last 15 years.
Teams that focus on performance management have been shown to generate as much as 30 percent more revenue per full-time employee than average teams
0
50
100
150
year 1 year 2
Revenue
Only 29 percent of companies create individual goals aligned to the organization
29%
71%
Company
Aligns Not Align
A full 52 percent of midlevel managers and 74 percent of lower-level employees perceive the linkage between individual goals and corporate goals as very weak
0%
50%
100%
Mid level Lower Level
52%74%
48%26%
Employees perceive the linkage between individual goals and corporate
goals
Strong
Weak
Up to 50 percent of employee time is spent working toward nonstrategic objectives
50%50%
Working spend
Strategic
Non strategic
An Oracle White Paper, June 2012
Are we capable?
YES We have to !!
The Answer is…
What is a Competency?
Observable abilities, skills, knowledge, motivations or traits defined in terms of the behaviors needed for successful job performance.
Source : Human Resource Systems Group, 2012
The Iceberg as an Analogy
What is Competency-based Management?
An HR management approach that standardizes and integrates all HR activities based on competencies that support organizational goals.
Source : Human Resource Systems Group, 2012
Basic Competency Architecture
Why competencies?
Competencies translate the
strategic visions and goals for
the organization into behaviors
or actions employees must
display for the organization to
be successful.
(Source : Spencer, 2001)
63%
19%
12.5%
63% reduction in turnover due to increased employee satisfaction – due to greater clarity
about performance expectations
12.5% increase in sales and profits due to Competency-based training programs
19% improvement in employee performance
The Benefits of better Employee competency
The Benefits of better Employee competency
Improved leadership capacity– Companies with highest rated leadership development
programs, compared to those with weak programs experienced:
• 600% increase in overall business impact
• 640% improvement in their leadership bench strength
• 480% improvement in leader engagement and retention
(Source : Bersin, 2007)
Superior Talent Management = Significant Advantages
– 26% higher revenue per employee
– 28% less likely to have downsized during 2008-2009
– 40% lower turnover among high performers
– 17% lower overall voluntary turnover
– 87% greater ability to “hire the best people”
– 92% greater ability to “respond to changing economic
conditions”
– 144% greater ability to “plan for
future workforce needs”
– 156% greater ability to “develop
great leaders”
The Benefits of better Employee competency
(Source : Bersin, 2010)
Competency-based Performance Management
• Competencies define the behaviors necessary for goal achievement
• They facilitate a developmental approach to performance management
• Three Stages of Performance Management
How to integrate Competencies in the Performance Management ProcessOption #1 Option #2
By defining the competencies needed to perform each Performance Goal / Objective
The manager and employee identify the key competencies required to achieve each performance goal / objective (typically 1 to 3 competencies per goal / objective)
At the end of the performance cycle, the employee’s performance is evaluated in relation to the performance goals / objectives as well as the key competencies associated with each goal.
the competencies being assessed are entirely consistent with the employee’s performance goals for the performance review cycle.
Not all competencies within the competency profile for the employee’s role / job will necessarily be assessed within the cycle
By integrating the competencies for the employee’s job into the PM process
The performance plan includes the performance goals / objectives for the review period as well as the complete set of competencies from the competency profile for the employee’s role / job
The performance goals / objectives address “what” must be accomplished during the review period, and the competencies measure “how” the employee conducted him/herself to accomplish their work
All competencies defined in the competency profile for the employee’s role / job are evaluated
key competencies for the effective performance during the review cycle, but not included in the competency profile, will not be assessedSource : David D. Dubois & William J. Rothwell, 2004
Integrated Performance Management System
Goal Setting
Interim Review
Talent DayPerformance
Review
Year end Review
Jan-Feb
Jun-Aug
NovDec-Jan
Dec-Feb
Annual Base SalaryShort Term Bonus
Long Term Incentive
Multiple years of Performance creates basis
for judgement of Sustained PerformanceLevel High, Medium, Low
Succession Planning
List of Competencies (example)
LEADERSHIP COMPETENCIES :
1. SHAPE THE FUTURE
2. REAL ACCOUNTABILITY
3. BUSINESS ACUMEN
CORE COMPETENCIES :
1. INTEGRITY
2. TEAMWORK
3. INNOVATION
4. ACHIEVEMENT ORIENTATION
5. CUSTOMER FOCUS
TECHNICAL COMPETENCIES :
1. FEED PROCESSING2. FEED FORMULA 3. FEED WAREHOUSING4. PROFIT & LOSS FEED BUSINESS5. SERVICE LEVEL TO CUSTOMER 6. ETC…
Matriks Kategori Talent (MKT)
Berpotensi(3/1)
Sumber Daya(1/3)
Potensi Tinggi(2/3)
Bintang
Potensi Tinggi(3/2)
Sumber Daya(2/2)
Sumber daya(1/2)
Perlu Perhatian(2/1)
Perlu Perhatian(1/1)
----------------- Potensi Talent ----------------
Rendah Tinggi
Kes
inam
bu
nga
n K
ine
rja
(Ap
a d
an B
agai
man
a)
Rendah
Tinggi
Suggested Action Plans
Inconsistent in meeting
agreed individual
business targets
consistently exceeding
agreed individual
business targets
•Recognise and reward
•Provide feedback
•Mentor/coach to improve
Leadership
•Acknowledge contribution
Recognise and reward
•Challenge/stretch
•Expose
•Coach
•Set clear Milestones
•Provide feedback
•Coach Monitor/track
•Decision to continue
or end employment
•Reward
•Milestones
• Provide feedback
•Training
•Coach to improve
delivery
•Specific goals &
objectives
Consistently
exceeding
expectations
Inconsistent in
meeting
expectationsPotentialCapacity
WHAT
Competencies
& living values
Potential discussion
Skills ExperiencesPerformance
PT
Put real evidences
objectively
2611/13/2017
Talent Development
27
Succession Plan
Contoh Template
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