5 examples of effective performance management: Lessons from the 2015 SuccessFactors Performance Management Throwdown
The best way to get good at something is to study people who do it well as opposed to watching people who do it poorly. We can learn from other’s mistakes, but we learn far more from their successes. Despite this commonsense knowledge, many discussions about performance management (PM) focus on what doesn’t work rather than looking at what does. This is why I was enthusiastic when one of our customers suggested hosting a “PM Throwdown”. Her idea was inspired by a cooking show with the same name, and involves 3 or 4 companies participating in a friendly but intense competition to see who has the best PM process. The winner is chosen by an audience consisting of HR professionals from other companies. What is great about throwdowns is they provide a “strength-based” look at PM by focusing on what works rather talking about what doesn’t. They are about learning from success rather than dwelling on failure.
Starting in April, 2015 we held four regional PM throwdowns across the country. The winners of each region then met for the National Championship PM Throwdown on August 12 at SuccessConnect in Las Vegas. Thirteen companies participated: Allergen, Bank of America Merchant Services, Capital Group, Conagra, First American, Johns Hopkins Medical, Lowes, Micron, New York Life, Peabody Energy, Transystems, UnderArmour, and Wawa. The result was one of the most engaging, informative and entertaining series of HCM knowledge sharing sessions I have experienced in the 25+ years I’ve worked in this field.
The following are a few highlights learned from watching 13 companies compete for “best” PM process. Three general themes emerged across almost all of the contestants:
- Their PM approach was tailored to their company’s specific needs, resources and constraints. Methods that worked well in one company might fail in others.
- They stressed the importance of ongoing employee-manager dialogue. Managers were provided with training and tools to engage employees in constructive discussions about performance. Managers were also measured and held accountable for maintaining at least a minimal level of employee-manager dialogue during the year.
- They emphasized transparent, consistent and accurate methods for rating performance and making decisions related to pay, promotion and development. Counter to claims that companies are “getting rid of ratings”, not a single company endorsed this concept. But they strongly emphasized the importance of ensuring ratings are conducted at an appropriate time in an appropriate forum involving the appropriate people. And that employees and managers understand how evaluation data will and will not be used.
It was also fascinating to see the range of approaches taken toward performance management. Every company seemed to have a different “theme” underlying its PM process. These themes reflected the company culture, the nature of its business, and the characteristics of its workforce. The following are how I might characterize themes for a sample of 5 of the companies that participated in the throwdowns. Note, these themes are in my words. The companies didn’t describe themselves using these exact terms, although some of them came pretty close.
- If you respect me then you will tell me the truth. This company emphasized the value of clear and direct discussions about role expectations, development goals, and career opportunities. They stressed clarity and dialogue with very open discussion of people’s current performance level. Key to their success is a culture where people strongly believe that performance is a temporary state that can stay constant, improve or decrease over time. It is important to always know where you stand, what you need to build on or change to improve, and that you are recognized and rewarded based on your contributions.
- Growth is about change: yesterday isn’t good enough for tomorrow. This is a fast growth, entrepreneurial company that expects, demands, and rewards constant creativity and openness to change. They make significant changes to their PM process every year, and put an emphasis on communicating why these changes matter to achieving their business strategies. It’s a high energy company with lots of opportunities for those who thrive in such an environment, but they make no apologies about the need to keep up if you are going to survive.
- Constant conversations increase caring and commitment. This company invests heavily in tools, training, and resources to create a feedback rich, supportive learning environment for employees. Managers are given considerable leeway in deciding how to engage employees about performance, but are consistently measured and held accountable for creating some level of engagement. Because of the level of open discussion around performance, performance assessment is almost a “non-event” for the company. Managers don’t meet to calibrate performance evaluations, they meet to formally validate the accuracy of informal evaluations they’ve made throughout the year.
- Every day is playoff day: high performance is necessary, expected and rewarded. This company works in a fast paced global market where companies can gain or lose large segments of market share in a matter of months. Innovation is constant, relentless and accelerating. Their PM process emphasizes communication of clear goals tied to specific corporate objectives. Employees know exactly what numbers their units have to achieve to be successful, and they know great things happen when they succeed. But there is also little business tolerance for failing to meet expectations.
- Treat people like the costly and precious resource they are. This company works in an industry where the size of the workforce is directly tied to the volume of business the company is delivering. Achieving higher levels of profit and growth in an up market requires hiring more skilled employees. But when there is major market downturn the only way to remain solvent is to effectively reduce workforce costs. Because employees are so valuable, the organization has invested in a PM process that emphasizes methods for defining employee expectations and providing development resources employees need to succeed. But because employees are so costly, the process also includes systematic evaluation to ensure employees are meeting expectations and to allow effective and fair restructuring that may be caused by market downturns outside of the company’s control.
On the surface, someone might look at these themes and express concerns that some of these companies are overly competitive, aggressive or high pressure. But this isn’t true. All of the companies are highly successful organizations. Several have been in existence for well over 50 years and most have won significant awards for workplace quality. What makes them different is their willingness to constructively address the challenges associated with managing performance. They understand fairness is not about pretending that employees all perform at the same level. Nor is it effective to force managers to make ratings they do not believe in. Fairness and effectiveness comes from creating performance management processes that clearly communicate expectations, support employee growth, and accurately identify top performers without making lower performing employees feel like losers.
If I get enough questions from readers I’ll write a second blog describing the themes for the other 8 contestants and maybe even share who won the national PM Throwdown.