Reimagine Performance Management - Global · Nestle: Continuous Performance Management + Q&A 14.45 –15.15 ... Shorten appraisal forms Reduce the number of forms and make them very

Reimagining Performance Management

Industry Insight

December 2018

Etan Bernstein & Dror Feldberg

AKT Confidential & Proprietary

AKT Confidential & Proprietary 2

Etan BernsteinCo-Founder & Managing Partner, People [email protected]

Dror FeldbergHead of Pre-Sales, HR Cloud [email protected]

Pablo LamaManaging Director, AKT [email protected]

Dror GurevichCo-Founder and Managing Partner, AKT [email protected]

AKT team here today

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SAP Presenters

Christa RengesHR Business [email protected]

SAP event organizers

Rob [email protected]

Egle PociuteSenior [email protected]


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TopicTime

Welcome, agenda, introductions9:00 – 9:30

Your Performance Management Landscape

9:30 – 10:00

SAP SuccessFactors’ own Performance Management story + Q&A

10:00 – 10:30

Break10.30 – 10.45

Adapting Performance Practices to the Digital Age

10:45 – 11:30

Align11:30 – 12:00

Lunch12:00 – 13:00

TopicTime

Engage13.00 – 13.45

Empower13.45 – 14.05

Differentiate14:05 – 14:25

Break14:25 – 14:45

Nestle: Continuous Performance Management + Q&A

14.45 – 15.15

Deeper dive per HR and IT15:15 – 16:15

Change management and adoption 16:15 – 16:55

Summary / Closing16:55 – 17.00

Agenda


Everyone Hates Performance Management!


Does Your Performance Management Process Drive Value?

Only 8% of Companies Report that their Performance Management Process Drives High Levels of Value

Mckinsey: Harnessing the power of performance management, 2018


The Current Approach Sucks

Timing

Calibrationeffort

FrequencyForced distribution

Backward oriented

Manageras singleassessor


Majority of Organisations are Rethinking Performance Management

65%

65% of organisations have made one of more of these changes to their performance management systems in the past 18 months

Mckinsey: Harnessing the power of performance management, 2018


Let’s Not Kill Performance Management Just Yet

Managing, differentiating and rewardingfor performance is still the winning formula. But it has to be executed well.

Aon Hewitt

“Democracy is the worst form of government,” Winston Churchill reminded us in 1947, “except for all those other forms that have been tried from time to time.” The same is true for performance evaluations: They’re far from perfect, but they’re also far better than the alternatives.

“Let’s Not Kill Performance Evaluation’s Just Yet”, HBR, 2016


The Basic Objectives Still Hold True

Companies still aspire to achieve the following:

ManagingEmployee

Performance

Every person is working on the right things

and towards the right results at every given

time (as things change rapidly)

Each person is working in a professional, efficient and effective manner, and constantly improving

The company is able to consistently identifyits outstanding performers, low performers and other key populations

The company is able to differentiate compensation & recognition and invest in specific individuals based on performance and potential

Employees are provided with development and growth opportunities based on their performance gaps and personal development objectives


Adopt “digital” principles


Frequent

Candid & Transparent

Peer-to-Peer

AKT Confidential & Proprietary 13AKT Confidential & Proprietary 13

Today's employees want frequent feedback, open communication, and collaboration with their peers.

Fast Company 2015



People Expect to Receive Frequent & Immediate Feedback

Nearly 60% of polled employees said they would like feedback from their bosses on a daily or weekly basis. More interesting than that, for employees under age 30, the desire for regular feedback flow jumped to 72%.

PwC, 2016

80% 80% of Gen Y said they prefer on-the-spot recognition over formal reviews

72%

“Real-time micro-feedback”



People Expect Transparency & Candor

A lack of transparency results in distrust and a deep sense

of insecurity.

Dalai Lama



Peer-to-Peer Reviews Represent the “Truth” and is the Basis for Building Reputation Capital

Vs.

Vs.

Vs.


Adopt “digital” principles, leverage technology

Focused


Frequent


Peer-to-Peer

Leverage

Technology



Technology is Both an Enabler and a Driver of Rapid Innovation

• Cloud

• Mobile

• Multi-Channels

• Always Connected

• User Experience

• Artificial Intelligence

• Big Data & Analytics


Adopt “digital” principles, leverage technology and design differently…

Focused


Frequent


Peer-to-Peer

Leverage

Technology

Focused Simple

Segmented



One Process Can’t Achieve Too Many Objectives


Enforcingbehavioural

competencies Developingemployees

Differentiatingrewards

Assessingemployees

Improving company and

individual performance


One Process Can’t Achieve Too Many Objectives

Is it a surprise when a single process fails to succeed at all of this?

Aligning individual goals to business

objectives

Identifying employeedevelop-

ment goals

Providing data for sound talent

decisions, promotions,

retention, terminations, key

talent pools Limiting legal risk

and exposure

Engagingemployees



Keep it Simple. Less is More.

✓ Keep the end users—your employees and managers— in mind

✓ Stop cramming too many goals into an employee’s individual plan. Fewer goals are better as it focuses attention

✓ Shorten appraisal forms

✓ Reduce the number of forms and make them very simple and easy to use

✓ Don’t force a “bell curve” distribution on small groups


Compensation

Programmes for different populations –executive comp, sales

comp, broad base comp

Learning andDevelopment

Learning & development solutions segmented by function, level and unit

Talent

Customised assessment and development

programmes for varied talent populations


Segmented Solutions have Become Common Practice

• A one-size-fits-all approach to managing performance doesn’t take into account what drives employees.

• Different performance management solutions for different populations in the same organisation can and should be implemented.


Adopt “digital” principles, leverage technology and design differently…

Focused


Frequent


Peer-to-Peer

Leverage

Technology

Focused Simple

Segmented


Four Archetypes

Ensure Business Leader Alignment

Align

Direct, Engage and Develop in Real Time

Engage

Provide Quantitative, Gamified Continuous Performance Feedback

Empower

Differentiate and Calibrate Talent

Differentiate

Top 2-3 levels of the organisation

Knowledge workers with long-term results

Populations with short term measureable results - sales, call center, help desk, services

Solution for business leadership and HR to identify target populations

26

Align Ensure Business Leader Alignment


Top performing businesses are 20 times more likely to have every manager’s goals aligned to the company strategy.

“How Smart HCM Drives Financial Performance”, Workforce Intelligence Institute & SuccessFactors, 2006

Ensure senior management is aligned and living their goals

Goal congruence is defined as consistency or agreement of individual goals with company goals. Everyone in the organisation needs to be rowing in the same direction.

“Cost Accounting for Dummies”, Kenneth Boyd, 2013

Align- Ensure Business Leader Alignment

Objective


56% of organisations have a formal goal cascade from company to business unit/function, but then allow managers and individuals to informally set objectives off of the business unit/ function.

A more elaborate cascading process rarely adds value, and can be very time consuming.

Aon Hewitt’s Performance Management / Career

Development Survey; 2013

15%

73%

10%

2%

Alignment of employee’s goals with company’s business strategies


Design Principles – Goals Management

Very aligned, with clear line of sight

Do not set performance goals

Not aligned, little or no line of sight

Somewhat aligned, corporate goals are communicated and left to local managers to translate


TransparencyAcross all Levels

Unit and individualgoals are transparenttop-down, bottom-up

and horizontally

AgileRe-alignment

When changes are made throughout the

year - unit and individual goals are quickly re-aligned

Livethe Goals

Goals arefrequently reviewed,

communicated, tracked and tied to day to day activities

Goal Congruence and Cascading

Company goals are cascaded to

business units andto individual leaders

in a tightlycongruent andaligned manner


Design Principles


Who are the Key Stakeholders in the Process?

MatrixManager

SystemAdministrator

2nd LevelManager

HR & OD

HR

DirectManager

HR Analytics

DA

Employee

Direct Report and Peers


Achieve the Visibility Level that is Correct for Your Organization

2nd Level Manager

Direct Manager

Employee and Peers

Direct Reports


Goal Cascading / Pulling

• The application supports Goal Cascading and Goal Alignment to ensure business leaders are aligned on the business goals

▪ Cascade push

▪ Cascade pull

▪ Goal alignment

2nd Level Manager

Direct Manager

Employee

Direct Reports


Group Goals / Team Goal and Initiatives

• Group Goals: are used to communicate goals to a group of employees for their awareness but they are not evaluated against them

▪ Examples: EBIDA, net income, etc.

• Team Goals: pushing a common goal to a group of employees

▪ Example: achieve sales of GBP 1M

2nd Level Manager

Direct Manager

Employee

Direct Reports


Initiatives

• Initiatives represent an enterprise's readiness to embark on a new venture. The motivation for an initiative arises from a desire to accomplish something that would benefit the organization, such as improving productivity or better customer facing

▪ Initiatives are not goals

▪ Goals are connected to Initiatives

2nd Level Manager

Direct Manager

Employee

Direct Reports


Organisations that revise their goals quarterly or more frequently are 65% more likely to be effective at controlling costs than those organisations that only revise their goals once per year.


Agile re-alignment with changes

Adapt goals as often as needed.

In today’s business environment, goals set at a high level in the strategy room are often modified in a few months’ time. Yet KPIs down the line are rarely adjusted. Of respondents who reported that their companies managed performance effectively, 62 percent said that those organizations revisit goals regularly—some on an ad hoc basis, and some twice a year or more..

“Maximizing the impact of Goal Setting and Revising”, Bersin and Associates, 2011 “The fairness factor in performance management", McKinsey 2018

36

EngageDirect, Engage and Develop in Real Time


Engage- Direct, Engage and Develop in Real Time

Objective

Shift from the traditional feedback has been spearheaded by young employees, who are accustomed to instantly "liking" posts on Facebook or rating Uber drivers, and asked for a solution that:

▪ Is flexible and dynamic

▪ Enables continual feedback and coaching

▪ Fosters constant change, and challenges the assumptions under which the initial planning of the year had been done

▪ Encourages innovation and professional growth

▪ Keeps employee engaged and with a sense of achievement


• Objective performance data

• Feedback on behaviours, interactions, processes, and results

• Real-world evidence and examples

Content RichPeer to Peer

Multi Assessors

• Everyone can give and receive feedback

• Simple as a “like”, or deep as a dedicated discussion

• Platform for peer recognition

• Enables to build reputation capital

Frequent & Immediate

• Feedback at any time

• Frequent and as-needed

• Available through mobile devices

Dialogue

• Fact-based performance and development discussions

• Jointly review objectives that are more fluid and changeable

ForwardLooking

• Focused data that is inspiring and motivating

• Forward-looking coaching

• Linked directly to learning and development action


Design Principles


Following a post, shared on IBM's internal social media platform, IBM received 2,000 comments (and 75,000 views) from its employees, advising on the desired performance management process

The outcome: “IBM Checkpoint”

• steady stream of continuous feedback and coaching

• IBMers to create, edit, and refine goals at any time throughout the year


Case Study: IBM Checkpoint

“Our new approach to performance management is empowering employees. They’re in control of establishing goals and, by giving them more regular feedback and coaching, they’re able to continuously improve and succeed. By establishing a culture of continuous dialogue with our employees, we’re better able to meet our wider business goals as IBM continues to evolve.”

Michelle Rzepnicki, Director of Performance Management, IBM

https://mediacenter.ibm.com/media/1_g6y4n4vt



Case Study: Adobe Check-in

https://www.adobe.com/check-in.html

www.adobe.com/check-in


http://www.adobe.com/check-in



Case Study: Adobe Check-in


The Benefits of Continuous Performance Evaluation

Link activities to goal plans: integration of activities to goals management, which helps align employees’ work on their performance objectives

Help managers coach team members: coaching also plays a big role in improving employee performance. Managers can use the feature to coach employees and boost their professional growth.


Better project tracking: employee can capture and track activities and achievements in real-time to let their managers get better visibility of what they are working on. Additionally, managers can add activities and achievements on behalf of their employee that report to them

Structured and meaningful one-to-one discussions: the list of activates and achievements for a given employee are available in the application. This can help guide the conversion between employee and managers that ensure all important topics are discussed as well as provide focus on improving future performance

The Benefits of Continuous Performance Evaluation


Mobile Friendly To Better Engage Your People

45

Empower Provide Quantitative, Gamified Continuous Performance Feedback


Populations with short term measureable results, and businesses where daily grinds and repetitive challenges can sorely affect customer relations

Shortterm sales

Serviceteams

Call centers,Help desks

Empower- Provide Quantitative, Gamified Continuous Performance Feedback

Target Population


▪ Process of using game thinking and game mechanics to solve problems and engage users

▪ The game brings many wins:

For the Organisation

• Improves business results

• Encourages higher-quality customer service

For the Manager

• Improves business results

• Gives constructive platform for your reports to grow and develop

For the Customer

• Leads to better and faster service

For the Employee

• Enables the employee to receive real-time feedback and learn/grow

• Helps the employee stand out within the organisation


Objective


Tied directly to learning

• Provides a clear call to action

• Suggests micro-learning that is easy to digest

• Has built-in levels to continually motivate employees to do better

Gamified

• Uses playful and engaging game narratives

• Focused on fun and challenging activity

• Embedded as partof the daily routine

Real time

• Real-timefeedback loops

• Clear linkagebetween actionand results

Quantitative

• Objective and fair feedback

• Based on key performance metrics and scoring system

• Shows where you stand against goals, peers and personal best


Design Principles


Game-Effective Example for Gamification


Game-Effective Example for Gamification


• Industry giants like Comcast, Google, SAP, Publicis, Dyson, etc. are using sales gamification to inspire their sales forces

• Gartner recently issued a report on gamification among help desk units and found that:

• Call abandonment rates fell from more than 30% to 10%

• The average speed at which employees answered call problems fell from 5m to 1m


Gamification Analytics

52

Differentiate Talent Differentiation and Calibration


Differentiation is Still Here


Differentiate- Talent Differentiation and Calibration

Objective

The need to differentiate individuals by level of performance and contribution is still relevant and critical for the proper management of various organisational processes

There are only a few managers who can provide great feedback without a rating.The vast majority of managers aren’t good enough to work ina system without a rating.

Brian Kropp, HR practice leader at CEB

The reality is, even when companies get rid of performance evaluations, ratings still exist. Employees just can’t see them. Ratings are done subjectively, behind the scenes, and without input from the people being evaluated

“Let’s Not Kill Performance Evaluation’s Just Yet”, HBR 2016


Any “strategy” that undermines the connection between performance and rewards will lose the war for talent

There is clear evidence that:

• Strong performers are attracted to organisations that recognise their contributions

• Strong performers will leave organisations that do not reward performance

• Weak performers will “select” themselves out of organisations that emphasise high performance in rewards

• Weak performers are more likely to stay with an employer when differentiation and pay-for-performance relationships are weak

“Surrender Is Not a Strategy”, Aon Hewitt, 2014


Performance & Rewards Connection


Visualisation and functionality makes it very easy for managers to allocate individual employees to pools, levels and categories in a comparable manner

Simpleand Quick

Clear differentiating criteria and cross-unit transparency and calibration processessupport unbiased and consistent decision making

Fair, Consistentand Unbiased

Outcomes of the performance process link directlyinto compensation, succession, development and learning processes

Tightly Linkedto HR Processes

Actionable Communication

Selected outcomesof the process are communicated to employees in order to drive action such as development and performance improvement


Design Principles


Review process every 6 months:

Peer-2-Peer Evaluation

Managers collaboration discussions

Analyzing reviews for bias

Compensation is mathematicallydriven from performance review

“Let’s Not Kill Performance Evaluation’s Just Yet”, HBR, 2016

• Translating micro assessments intoa macro performance rating

• Assessing a period of time, not a person

Even David Bowie released a bad album once in a while


Case Study: Facebook


People who receive assessments in the bottom 10% have a 36% chance of making it into the top half within a year

For us, time invested in performance reviews is time saved on compensation

We’re not saying that performance evaluations are uniformly beneficial. We’re saying that they involve trade-offs, and we’ve decided to keep ours to achieve the goals of fairness, transparency, and development

The solution here is not to throw out performance ratings but to build a culture that recognises and rewards growth


Case Study: Facebook


Four Archetypes

Ensure Business Leader Alignment

Align

Direct, Engage and Develop in Real Time

Engage

Provide Quantitative, Gamified Continuous Performance Feedback

Empower

Differentiate and Calibrate Talent

Differentiate

• Goal congruence and cascading

• Transparency across all levels

• Live the goals

• Agile re-alignment

• Content rich

• Peer-to-Peer multi assessors

• Frequent & Immediate

• Dialogue

• Forward looking

• Quantitative

• Real time

• Gamified

• Tied directly to learning

• Simple and Quick

• Fair, Consistent and Unbiased

• Tightly Linked to HR Processes

• Actionable Communication


Change Management

Maximising Adoption and Long-Term Consumption


AKT’s Methodology is Designed Around the Customer Journey

1. AKT LaunchOur methodology to help clients best prepare for programme success through roadmapping, business case development, and preparing for the change

Val

ue

Rea

lisat

ion

Program

Kick Off

Optimisation Release

Optimisation

Release

Time

Phase 1

Go Live

Phase 2

Go Live

Phase N

Go Live

Readiness

WorkshopReadiness

Workshop

2. AKT AccelerateOur proven implementation methodology is “Humanised”, vision minded, with strong focus on the business users experience

4. AKT OptimiseOur broad portfolio of support services, including a proactive approach for optimisation cycles and quarterly releases

3. AKT AdoptOur methodology for supporting the implementation with change management, communication and training, which goes beyond go live


Change Management Is Tough – No Silver Bullets“How to beat the transformation odds” (2015 McKinsey & Company)

“… Take more actions…. There is no silver bullet—and while some factors have more impact than others on a transformation’s outcome, the real magic happens when these actions are pursued together. Overall, the survey indicates that the more actions an organization took to support each of the stages of transformation, the more successful it was at improving performance and sustaining long-term health…”


Great Change Management Addresses Both the Left and the Right Sides of the Brain


Our Change Management Approach

Explore business, rationale and craft transformational vision

Map key stakeholders, secure stakeholder commitment to the change

Identify resistance (differential diagnosis) and address real resistance

Build capabilities and skills

Drive desired perception and behaviours (via ongoing communication, rewards and recognition, and short term wins)

Measure adoption, value and conduct optimisation activities

Leadership HR EmployeesLine managers


Stakeholder Mapping & Change Impact Analysis

People Managers

Anyone who

has someone

reporting into

them

“Physical” changes

Individual changes required

▪ No more paper forms▪ Completely different way of looking for things, finding

how to do something▪ Much more information for me at the fingertips,

anytime, anyplace▪ Transparency – everything you do will be seen

Managers’ role & interface with HR: ▪ More self reliant, empowered - but also a potential

feeling of abandonment by HR▪ Resistance to taking work from HR… (Why do I need to do

your job?)▪ Have more time to do their people processes – but may

feel that they “are being managed by the machine”.▪ Taking more responsibility to manage their people,

initiate processesWork norms and culture: ▪ Less flexibility, “grey space”, ability to manage individuals

individually▪ Not just do this “technically” – but rather ensure we have

a deeper conversation. Operating the system and usage ▪ Need to understand how the system is structured▪ Need training on confidentiality and data protection

All employees

and managers

in the HR

function

Human Resources “Physical” changes

Individual changes required

▪ Recording everything on one system▪ No more use of Excel spreadsheets▪ Self servicing – encouraging employees and managers

to do things themselves▪ Uploading and viewing information in a new way▪ Real time information to drive what we are doing▪ New approval cycle for HR transactions – online▪ View all employee information anywhere, anytime

(e.g. emergency contact information) ▪ No longer in the “critical path” to the managers in the

decision making process – how do we ensure that HR expands its quality mentoring role?

Changes in role and positioning vis a vis managers:▪ Better quality conversations with managers▪ Change agents for expanded manager role, use of self

service▪ Coach and push back to individuals and managers about

them using the system. Not fall into “I’ll do it for you”.▪ Potential loss of power, value to managers, lose of being a

custodian of the dataDevelop new capabilities: ▪ Build analytical skills, upskill business partnering skills to

be able to provide more value on top of the data, instead of the administrative and transactional support

▪ Journey-based mindset, open to ongoing adoption of functionality as the platform develops

▪ Some HR jobs will change significantly (more administrative roles)


Measure Stakeholder Attitudes Towards the Change and Their Readiness for Adoption

• Attitudes towards the change

▪ I have a clear image of “how success will look”

▪ I am willing to take the necessary steps and learning to contribute to the change

▪ I perceive negative consequences to not changing

▪ I feel that the change is well planned

• Business need and rationale

▪ I understand the business rationale for why things are changing

▪ I believe that this change will benefit the organization

▪ I believe that this change will benefit the employees of the organization

▪ I believe this change will benefit me

• Leadership

▪ Senior management is visibly committed to making this change succeed


Measure Actual AdoptionLeverage SuccessFactors built-in usage measurement tools


Measure Actual AdoptionLeverage SuccessFactors built-in usage measurement tools

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Usage via ESS


Reimagining Performance Management

Closing Remarks


Stay ahead of the Digital HR curve - follow AKT on all social media Continuous enablement with the latest SAP SuccessFactors and Digital HR innovations and best practices

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Extraordinary Results Workshop Series

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Workshops can be half-day to two-day sessions held at customer’s offices.

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73

Recommended Bibliography

• “Ahead of the Curve: The future of performance management”, McKinsey, 2016

• “Harnessing the power of performance management”, McKinsey 2018

• “Reinventing Performance Management”, HBR, 2016

• “The Performance Management Revolution”, HBR, 2016

• “The Benefits of Peer-to-Peer Praise at Work”, HBR, 2016

• “Let’s Not Kill Performance Evaluation’s Just Yet”, HBR, 2016

• “Moving Ahead: Next Generation Performance Management”, Mercer, 2016

• “The Measure of a Man” The Economist, 2016

• “Surrender Is Not a Strategy”, Aon Hewitt, 2014

• https://www.adobe.com/check-in.html


Documents

Reimagine Performance Management - Global · Nestle: Continuous Performance Management + Q&A 14.45 –15.15 ... Shorten appraisal forms Reduce the number of forms and make them very