Redefining Performance Management - How Celgene and General Motors are Approaching the Challenge

© 2017 Zenger Folkman

Redefining Performance ManagementHow Celgene and General Motors are Approaching the Challenge

Dr. Jack Zenger and Dr. Joe Folkmanwith

Crystal Zuckerman and Maria Brennan—Celgene, and Kelly Kuras—General Motors

February 22, 2017


Joe Folkman, Ph.D., is globally recognized as a top leader in the field of psychometrics, leadership, and change. He is a consultant to some of the world’s most successful organizations, a best-selling author, and a frequent keynote speaker and conference presenter. His research has been reported in numerous publications including, The Harvard Business Review, Forbes, CLO Magazine, The Wall Street Journal, Huffington Post, Business Insider, CNN, and others.

For more go to: http://zengerfolkman.com/joe/

Dr. Joe FolkmanPRESIDENT

Jack Zenger, D.B.A., is a world-renowned behavioral scientist, best-selling author, consultant, and a national columnist for Forbes and Harvard Business Review. With more than five decades of experience in leadership development, he is recognized as world expert in the field of people development and organizational behavior. His ability to connect with Executives and audiences through compelling research and inspiring stories make him an influential and highly and sought-after consultant and speaker.

For more go to: http://zengerfolkman.com/jack/

Dr. Jack ZengerCHIEF EXECUTIVE OFFICER


I asked a large group a questions:Who here had a positive and motivating experience in your performance review?

• One or two hands went up.

Performance Reviews


What’s Wrong with Performance Reviews?

1. Rear view mirror rather than a future focus2. Damages self-esteem of almost everyone3. Results in negative outcomes over 30% of the time4. Has more to do with who your manager and their biases

than your performance5. More focus on recent events than performance over time6. Becomes adversarial7. Infrequent review displaces on-going feedback8. Failure of the process to improve performance9. Compensation requirements drive appraisal process10. Misguided policies (Rank, Spank, Yank)11. Huge investment of managers’ time for little value


Reality – Performance Is Seldom a Totally Individual Process

“The fact is that the system that people work in and the interaction with people may account for 90 or 95 percent of performance.”

—W. Edwards Deming


Overcorrecting Performance Management

• A number of organizations are completely abandoning performance appraisals.

• Rely on ongoing informal conversations. • Sudden over-corrections often have serious

unintended consequences.


• Eliminate all rules and let people manage themselves

• Implement use of only positive feedback with no appraisals

• Use new criteria for appraisalo “Would you want this person on your

team?” o “Does this person deserve the

highest discretionary bonus?” • Rigid goal setting, detailed follow-up on

performance

Examples of Over Corrections


The Reality

• Organizations need documentation of poor performance and justification for denying any compensation increase.

• They need justification for generous increases to extremely high performers.

• We’re moving from transparent process to one that is secret, is not progress.

• Most organizations will look for a middle ground.


Performance Management—in Some Form—is Here to Stay

We are not supportive of completely tossing out performance management processes, nor immediately abolishing all performance appraisal. Why?

• Positive outcomes when done well• With no system in place, feedback between may be less frequent• Organizations need systems that set objectives and define work plans• Compensation needs an underlying rationale for its administrationNeeds to be some process to monitor people’s career progress• Periodic appraisal affords legal protection for the firm in cases of demotion or

termination• Some form of performance management has been forcing strategy to have

conversations happen• Employees want feedback on their performance and to know how they can improve


“At Celgene, we seek to deliver truly innovative and life-changing drugs for our patients.”

http://www.celgene.com/

Celgene Case Study Redesigning Performance Management

Maria BrennanSr. Director, Human Resources

at Celgene

Crystal ZuckermanDirector, Human Resources

at Celgene

http://www.celgene.com/


Celgene Story

• Existing system was very complex• Didn’t meet the needs of employees and managers• Didn’t give us performance and engagement levels

we wanted • As the business and the environment changed, we

wanted something that better reflected that change• Learned from other companies about the shift away

from performance scoring and labeling employees


Employees and Managers to have frequent conversations and document them in the journal

Components of the Journal1.Goals or Contributions – What are you working on throughout the year 2.Progress – Managers and employees can enter updates at any time to capture the key components of ongoing conversations and progress against their goals3.Possibilities—Career aspirations4.Learning Plan—Outlines the steps the employee is taking to achieve the career aspiration

Creation of Performance Journal


• Original goal: eliminate the ratingso Leadership not ready

• Focus on more coaching opportunities between manager and employee

• Former process was very time-bound and structured

• Ratings are associated, but are simplified

Ratings?


Learnings from the Pilot

• Self-scoring component in former process was difficult for the employee and the manager—It is now eliminated

• Manager determines the rating which directly impacts the annual performance bonus

• Before Journal separate places to list development plan, career aspirations, learning plan

• New journal has all 4 components in one place. • Much easier for employees to have a development

discussion at the same time they discuss their progress against goals.


How Critical Is The Skill Of The Manager?

• New program requires a high level of capability.• With new program Manager must review the

overall annual performance of an individual based on the multiple conversations and journal entries.

• More accountability is placed on the manager.• Manager must be much more effective in their

evaluation with the individual and more effective in their ability to provide feedback.


Lessons Learned

1. Involve the diverse employee population. Include differento Geographic regionso Levelso Functional areaso Etc.

2. One size doesn’t fit allo Tried to create a perfect system that would solve things a

system cannot solve3. Don’t underestimate the impact of your company’s culture

o If managers are not skilled at giving feedback it can impact the success of the system

o Leaders must have good discussions and skillfully share feedback


“The tool is only as good as the individuals who are utilizing it.”


Meet Kelly Kurashttp://www.gm.com/

General Motors Case Study Redesigning Performance Management

Kelly KurasSr. Manager, Talent and Organization Evaluation

http://www.gm.com/


GM — Where We Came From and the Start of Our Journey

We implemented an employee engagement survey using our1st global engagement model

1. Our employees in all 65 countries, were concerned about career management.• Do I have a future here?• What do the opportunities for me look like?• Is there a place for me?

2. We looked at both “individual contributors” and “leaders.” 1st line leaders were struggling the most with”• Their own personal engagement• The tools and conversations HR provided to talk about career paths and give

performance feedback in meaningful way


GM’s 3-4 Year Journey

1. We started with data from the survey2. Survey was carried through additional cycles.3. Engagement has increased 50% for the past 3 cycles 4. “How am I doing and where do I fit?” is still top of mind

Changes Made5. We simplified it6. Three simple conversations a year for Manager & Employee

• Goal-setting and alignment at the beginning of the year• Mid-year discussions about the employee’s career, path,

progress on goals, interests and passion, and developmental opportunities

• Year end discussion: How did you do?


It is not just what you get done, but how you get it done that creates an organization’s culture.

“Culture is about how we behave.”

Mary BarraCEO, General Motors


Simple tool• It is the facilitator of the conversation• Human elementPilot tests?• Goal is to stay relevant• Keeping loyal and new employees

engaged• Employees hear ratings as

• You love me• You don’t know me• You hate me

How Are The Three Discussions Documented?


Actions

• Experiments—looking at all the iterations and recommendations from vendor partners and thought leaders.

• Run different employee groups• Prototypes: Test what you are least sure of to learn more• 4 Ways – for Intact teams

1. Monthly performance ratings like the whole company2. Overall Check ins – have the conversation but no ratings3. Developmental conversations – how you did, how you can do better4. Development with no rating


Outcomes

• Early feedback: employees love the frequency of conversations • The two groups with no ratings are perceiving their performance, commitment

and career path at GM much more positively than those in the traditional route• Feedback through structured brainstorm – How am I doing against everyone I

am competing with for promotion?• A good leader is giving feedback in the moment. Not waiting until year end.

Getting real and being honest with each other• Employee insight: Wanted to know not just what leaders thought of them, but

what their peers thought as well.


Outcomes

• The more frequently discussions are held is a key• Next thing to test is upward feedback. How employees feel about giving

performance feedback to their managers.• We are seeing a definite preference for focusing on:

o Do I bring value?o Are you seeing value?o What can I do not only to help myself move forward, but help

the company move forward?


Overall Observations


Recommendations1. The System Must Be Accurate and Fair

• One person appraising an individual’s performance and reducing that to a single digit is usually neither.

• A manager does not always see an employee’s performance accurately or comprehensively. Only by obtaining multiple perspectives can fairness and accuracy be achieved.

• Individual performance is always a combination of the skills and capabilities of an individual put in the context of a job. Some jobs are easy and others are difficult.


2. The System Must Be Efficient

• Systems can take an inordinate amount of time, detracting from performance instead of elevating it.

• It must be more than a “box-checking” process.• More than being a flurry of paperwork, it should

improve in how people perform.


• Wise observers have noted that traditional performance management has done the opposite.

• Peter Drucker, Edwards Deming, and Joseph Juran have all wished for the elimination of traditional appraisal practices.

• Competition is not necessary. A marathon measures a person’s competence at running. For most, participating and finishing is the achievement. Beating a past personal time is exhilarating.

3. Inspiring and Motivating


• Traditional performance management practices have focused on meeting minimal performance expectations, rather than looking at the potential upper limits.

• The system can clearly link the individual’s performance to the organization’s strategic objectives and current initiatives.

• The system can emphasize a culture of taking responsibility, which goes beyond people merely feeling accountable.

4. Elevating Performance Is The Goal


• Growth mindset, versus people being fixed.• Preference for transparency, not secrecy. • Everyone must know and be supportive of

the strategy. • Minimal reliance on hierarchy• Culture of trust and collaboration, not

competition.• Belief that everyone’s development is

everyone’s opportunity and responsibility.

5. Cultural Requirements


Performance management should not be driven by money.

• One discussion each year will deal with compensation.

• Those most effected will be at the extremes, not the middle of the curve. Top performers deserve bigger raises.

• Not trying to rank or stack people; nor create fine distinctions for the large group in the middle

• Identify those who need remedial help• The rest will be forward looking, goal

setting and career oriented.

6. Relationship To Compensation


7. Use of Multiple Data Sources

• Some form of multi-rater feedback• Manager could collect multiple inputs• When the manager’s view is augmented with two

peers and two subordinates, rater bias goes away. What is being evaluated is now predominantly the performance of the individual.


Multi-rater Feedback: The Challenge

• Mixing development and evaluation• Respondents must know how data is to be used• Recommend data being given to individual before passing

it on to manager• Individual contributors benefit from multiple raters


8. Formal Development on Coaching Skills:

Coaching and providing feedback to others are skills that don’t come naturally to everyone. Skills can be acquired by formal learning methods that include:

• Understanding the ideal outcomes • Understanding the action steps required• Observing others do it correctly (live or on video) • Practicing and rehearsing those skills until you gain

competence and confidence in using them in real situations


9. Skills and Tools Required

• Managers need to be trained to use this or any other system effectively.

• Failure comes when leaders implement systems on which they have no experience.

• 360° or multi-rater feedback systems are especially useful tools in making this happen.

• They have been shown to be powerful tools in bringing about behavioral change.

• They also show promise of being able to help in the organization’s selection of leaders.


10. Monitor Coaching Discussions:

• Managers need to feel responsible for having frequent discussions with individuals and teams.

• A non-punitive mechanism for monitoring needs to be implemented.


Conclusion

• Performance management needs remodeling, not being tossed out completely.

• It should encompass new processes that take advantage of more that the immediate bosses’ views, that emphasize the future more than the past, and that explore the upper boundaries of performance rather than the minimum.

• This remodeling would preserve the positive elements of past systems, eliminate the major criticisms and meet the objectives of a more modern approach to performance management.


THANK YOU!Better Leaders.Better Results.Zenger Folkman exists to develop better leaders. Why? Because extraordinary leaders transform the world. They form more productive, creative, and flourishing organizations—ones that are simply better in every way.

We do this by conducting continuous research on leaders from all over the world. We then turn this research into insights that are delivered to individual leaders in a personal and constructive way. These scientifically derived insights result in prescriptive actions that become measurable business results.

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Redefining Performance Management - How Celgene and General Motors are Approaching the Challenge