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Playbook Performance ManagementSUMMARY OF THINK TANK SESSION #4 | 2013

© 2013 The RBL Group, Inc.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any

means, electronic or mechanical, including photocopying, recording, or using any information storage

or retrieval system, for any purpose without the express written permission of The RBL Group, Inc.

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Playbook: Performance Management

Playbook: Strategic Workforce Planning 1

TABLE OF CONTENTS

Executive Summary ...................................................................................................................................................................................... 2

Section A: Why Do Performance Management .......................................................................................................................................... 3

Section B: Designing A Strong Performance Management Framework .................................................................................................. 7

Section B2: Set Clear Goals .......................................................................................................................................................................... 9

Section B3: Identify Measures .................................................................................................................................................................... 12

Section B4: Ensure Consequences ............................................................................................................................................................ 18

Section B5: Provide Feedback .................................................................................................................................................................... 23

Section C: Speed Teaching ......................................................................................................................................................................... 28

OVERVIEW

This playbook provides an outline of key concepts covered at the RBL Institute Think Tank Session on “Performance Manage-

ment” held November 19-20, 2013 in Frankfurt, Germany. The document is written as a both a resource and training guide for HR

and leadership development teams, and is the central reference point for a variety of additional resources and tools. We encour-

age RBL Institute members to use this manual to train individuals, teams, and organizations in use of the tools outlined herein to

drive change and create sustainable business value.

Section Objectivesa. Why do Performance Management? How to build a business case for investment in a performance management system?

b. Designing a Strong Performance Management Framework

1. What are the Key Principles? When designing a performance management system what are the 3 most important

principles to incorporate?

2. Set Clear Goals: How to ensure alignment and have clear expectations of performance?

3. Identify Measures: What does success look like? What is the balance between individual and organizational measures?

4. Performance Management Framework Consequences: What and how do we reward or correct performance?

5. Performance Management Framework Feedback: What skills are required to coach and manage with feedback?

2 TheRBLGroup ©2013

EXECUTIVE SUMMARY

Do we need Performance Management? This session explores this topic and answers the question of how to create a framework

for the process of performance management.

In a business world of limited resources, organizations have to do more with less. This increase in productivity requires

increased accountability both from leaders at the top of the organization and throughout the entire workforce.

Accountability, a key trait of high performing organizations, can only increase through effective performance management.

While we know this to be true, both employees and managers generally dislike the PM process. Why? What can we do differently

or better to engage them in this key process? Improving performance management processes to ensure accountability is near

the top of all CHRO surveys and a topic of leading consulting firms.

We explore how to build the business case for increased investment of time and resources, a key issue in getting leadership

support. From there, consider the three key principles of effective design for a PM framework: Simplicity, Information and

Accountability. Using these principles, we explore setting clear goals, identifying measures, ensuring consequences and

providing feedback.


SECTION A: WHY DO PERFORMANCE MANAGEMENT

As we consider the topic of performance management, there are a number of questions that the participants want to explore:

Questions:• How do we best measure the “How” in a consistent way across the company?

• How do we create or implement a tool that links the individual to the collective?

• How can we build it in a way that adds value and is not seen as a duty?

• How do we make it a positive experience…make it an opportunity and not a threat?

• How can we improve the post-performance management follow through and improve leaders’ ability to coach and develop?

• Performance Management is about the conversation – how do we move from the 9 box to the one-on-one conversation?

• How do we manage org and individual performance when change is moving so fast that the goals set originally don’t apply

anymore – how do we build a flexible system that is adaptive?

• What are the consequences of performance management?

• Do we differentiate our talent enough through our performance management system?

u Key Issues with Performance ManagementAccountability: High performing organizations require accountability. Without clear expectations and adherence to those

commitments, organizations waste resources and fall behind their competitors.

What is a better name for this process? We need to start thinking more broadly about the whole PM experience and think of it as

a leadership activity versus an antiquated bureaucratic system.

• Strategic Performance Alignment

• Organization and Individual Performance Alignment

• Results and Talent Alignment

• Performance Leadership

Consequences: There is not one way to do performance management. Decisions have consequences. Be clear on what the

challenges are, as these should lead to choices and solutions. Some design options will have a positive impact, some a negative.

Does the positive outweigh the negative? Anticipate what impact the choices will have on the culture.

Set Clear Expectations: There is a tension between organizational and individual needs during this process. Simply stated,

inspect what is expected with respect. Clear expectations are necessary in order to conduct PM well.

Differentiate Talent: Managers are asked to actively manage other resource types, therefore, managing talent should become

an expectation similar to managing a budget. The difficulty is the paradox between standardization (fairness, efficiency) and dif-

ferentiation (engagement of talent). When we ask managers to make decisions that impact people there is a temptation to use a

“peanut butter” approach – giving everyone the same or equal treatment. We lose our best talent when that method is utilized.

Get Clear on Organizational Outcomes: What strategy is the organization trying to execute? How then do you evaluate

the work being done? What is strategic work and what work should be taken out of the organization? We need to change the

concept of “satisfaction” to “success.” Don’t measure customer or employee satisfaction, but think about what we do that will

lead us to success. We can then identify the individual work elements that lead to successful organizational outcomes.


Shareholder Impact: Hewitt and Assoc. found that company performance was higher in firms with performance evaluation

systems than in those without.

u What Goes Wrong in Performance Management

Five Focus AreasAddress what is working and what is not working.

We asked participants which of the five areas is their biggest challenge::

1. Goal Clarity - 2

2. Differentiation - 13

3. Compensation - 4

4. Workforce Decisions - 4

5. Feedback - 17

There is a consistent theme: companies are struggling with managers being unable to have meaningful dialogue with their

employees and giving feedback in a way that is clear. Too often the hard messages are not delivered, which is a critical step

for differentiation discussions. When performance differentiation is not clear, either undefined, or unmeasured, giving effective

feedback becomes problematic.

u Table Exercise—Participant Point Of ViewHow Can We Build a Case that PM is Worth Doing?

1. We are wasting money on those employees that aren’t working or aren’t working on the things that make the company

successful.

2. Share the Shareholder return information. Shareholder value is impacted positively by having a system for performance

management.

3. Look where performance management is being done well, where business performance is higher, and highlight findings to

senior leaders.

4. To change the culture, people need to act differently, which change can be influenced by performance management.

5. Keep the “rain makers” making rain, but make rules that they are incented to follow.

Performance With PE Program Without PE Program

Total shareholder return 7.9% 0%

Return on Equity 10.2% 4.4%

Real growth in sales 2.1% 1.1%

1 Goal Clarity Culture Challenges 2Employee

Differentiation Challenges 3Compensation

Messages Challenges 4Workforce

Decision Making Challenges 5Feedback and

Documentation Challenges

Business is failing, per-formance expectations clarified, but little/few consequences for failing to achieve results

Lack of equity with respect to performance and pay, over-rewarding under-performers and under-rewarding top performers, losing top talent, others stay, counter offers for most resignations, same recruiting process for all jobs

Everyone paid at midpoint with litter dif-ferentiation in bonuses/increases rigid compen-sation system forcing equality

High growth company, hiring rapidly, who is to be promoted, who gets a new assignments? Go inside? Go outside? How decide? Little data for workforce decision making, very little qual-ity data for development on succession

No appraisal “pre-view”—not holding the conversation, little coacheing as ongoing process, uses forced ratings MBWA but no notes/records kept


6. Can we really change the reputation of the firm? Instead of blowing up what we have and starting PM from scratch, im-

prove on what already exists - but with a clear view to the results required.

7. What are the risks of not doing PM?

8. Engagement should go up if PM is done well, as will individual capacity and empowerment to do more.

9. Make leaders publically accountable for the outcomes – tie it to their bonus.

10. Engagement questionnaire – how effective was the conversation to helping you do better in your role?

11. Think about performance management as a tool to execute strategy, instead of being just a tool for appraisal and rewards.

12. As the organization changes, past behavior and memory may hold it back. Use performance management to keep the

dialogue fresh and focused on relevant and desired behaviors.

u Dave Ulrich Take AwaysHR exists to make sure that our firms are successful. How do we do that?

We focus on three critical elements:

• Talent• Leadership• Culture

Performance management is one of the key systems that drives these three things.

• Really ask those that are being led how well their managers do performance management.

• Why don’t leaders do this? It’s uncomfortable, many leaders have never had a healthy performance conversation. We move

them from being individual contributors to manager positions, without training them to do so..

• The new generation is not as open to receiving feedback. They are the crown jewels of the family, they don’t have siblings,

they want to start with incentives but they don’t want to take feedback about their work.

• We haven’t talked about performance distribution. We still need to say who is better and worse, and that is what makes us

uncomfortable and difficult. The employees have done what we asked, but they still may not be our best performers.

• We need to get comfortable telling people they are average.

• It’s not just ages, there are differences in geographies. For example, in Brazil it is difficult because of the culture.

• It has to be done throughout the year. A static one-time or annual event will no longer suffice.

• Gen Y will have a positive impact to giving feedback, they are open to giving feedback. But they need to learn how to listen

to it.

• How do we encourage the conversation, and make it positive? Can we have equality and differentiate at the same time – we

respect everyone, but we treat people differently based on their skills and impact.

• Why do we do forced distribution and force a scale? We do it because we don’t think managers are going to do the right

things.

• Comparing against peer groups is also needful, but difficult.

• Most people judge themselves by their intent, not their behavior. Leaders need to judge outcomes and behaviors, not intent.

• HR’s job is to hold up the mirror on employee differentiation.

• An effective PM process helps talent get better, helps leaders gain respect, helps organizations build culture, and supports

strategy execution.

u Table Exercise – Participant Point Of ViewWhat are the Best and Worst Experiences You Have Had with Performance Management?

1. A couple of years that we focused on bottom 10%, we were really aggressive about moving them out. In the third or fourth

year, it wasn’t effective anymore. It started cutting into those that were productive. It was a good initial exercise to get

over the initial inertia, but it wasn’t good long-term.


2. Positive feedback was in a good conversation, nothing to do with tools, system or process. It works when we focus on the

conversation and development of the employee.

3. Negative experience, was a 2 minute conversation. Content of feedback and the way it’s given is so important.

4. Connecting performance management to cost [reduction] activity puts fear into the system and doesn’t work.

5. Examples of good and bad calibration; it can drive good conversation, but it is done badly when managers don’t own the

outcomes….”HR made me do it” “This isn’t the rating I wanted to give you.”

6. You have to distinguish what managers and employees are unsatisfied with, the conversation or the process. What’s

driving the dissatisfaction? Performance Management is the process of employees leaving the conversation feeling better

about themselves.

u Summary – Why Do Performance Management?We need to increase drivers or remove barriers to make changes:

Key Drivers:• Achieving the strategic goals

• Pay for performance

• Pushing up engagement level within organization

• Differentiating

• Cascade of goals

• Collecting data for career management

• Compliance

• Consequences by performance rating

• Compensation and bonuses linked to ratings

• Legal documentation

Key Challenges:• Feedback

• Culture

• Not perceived positively to get a consistent achievement

rating can be difficult

• System is too much the focus rather than the

conversation

• Billable time

• Managers not wanting to tackle tough issues

• A lot of bureaucratic work

• Limited funds

• Different ratings for different roles

• Goals can change

• Getting management buy-in

• Changing systems

• Proper differentiation

• Time

• Hard for managers to give honest feedback

• People development is not as valued….longer-term

process versus short-term rewards

• Fear of having a difficult conversation and how the

outcomes will be used

• Lack of role models

• Missing leadership and role modeling in the middle

• Trusting managers to do the right things

• Different inputs for feedback – 360s, stakeholder feedback

• Capabilities – Managers, HR, employee

• Transparency – all issues related to sharing or not sharing


SECTION B: DESIGNING A STRONG PERFORMANCE MANAGEMENT FRAMEWORK

u B1 – Key Principles• Simplicity – must be simple to be flexible, focused on what matters (doing the right work first).

• Information – good performance management should have real-time data more than one-time events which can distort

reality. Use data for meaningful conversations, use information to connect to other HR systems.

• Accountability – get it off the plate of HR, this is a business line responsibility – make it useful for line managers and HR

professionals, tie individual behavior to organization performance, build in flexibility.

Table Exercise – Participant Point of ViewAssessing guiding principles

Each of the 5 areas of focus has a diagnostic tool for your organization. It will help your organization focus on areas that need

more attention or definition.

We asked the participants to give us their highest and their lowest scores on

the tool to gauge patterns in the room. If they had more than one question that

they scored high on, then they were to indicate that as well, so the scores are not

exact numbers per number of participants. That is the top half of the chart.

The bottom half indicates overall score for the tool. Eight questions, scale top

score is 5, overall score possible is 40. This is to gauge average strength of focus

area from participants in the room.

This tool would indicate that the following would be areas to focus on improving:

• Focus on having on-going conversations more than forms.

• Focus on the “right work” first.

• Hold line managers primarily responsible for performance management ef-

fectiveness.

• Require accurate documentation (by the rater or the ratee).

Process Principles: Simplicity, Information, Accountability 1 2 3 4 5

To what extent does my company Low High

1. Keep performance management simple (free from bureaucratic process) 1 2 3 4 5

2. Have consistent application of performance management principles 1 2 3 4 5

3. Focus on on-going conversations more than forms 1 2 3 4 5

4. Focus on the “right work” first 1 2 3 4 5

5. Connect PM process to other HR systems (e.g. selection, development, rewards, etc.) 1 2 3 4 5

6. Focus on both the what (results) and the how (behaviors) 1 2 3 4 5

7. Hold line managers primarily accountable for performance management effectiveness 1 2 3 4 5

8. Require accurate documentation (by the rater or the ratee) 1 2 3 4 5

Process Principles Average:

Summary Outcomes from Performance Management Element Assessments

Focus Area 1: Process Principles

Questions High Low

1 10 15

2 12 4

3 5 15

4 2 7

5 20 4

6 15 4

7 6 13

8 4 5

Average Score

Below 15 0

16–20 2

21–25 7

26–30 16

31–35 8

36–40 0


As we move through the next sections, we follow the framework below. Basic performance management requires these four steps.

Effective performance management looks at these four steps through the lenses of simplicity, information and accountability.

1 2 3 4

Where are we going? How do we know if we are getting there?

What happens if we hit or miss standards?

How do we follow up?


SECTION B2: SET CLEAR GOALS

How do we set clear expectations….employee and manager should have the same agenda

• Setting clear strategy• Setting clear goals• Clarify expectations

Instead of Goal Setting – let’s call it “Clarifying Expectations”

What are the keys to clarifying expectations?What Is the Line of Sight? Set objectives that are tied to the strategy (between aspiration and individual action)….

making it clear what the role of the employee is and the impact of their actions on the strategy.

How Does the Employee Fit? It’s good to have a common shared vision between manager and employee – milestone

and timeline driven….actions have to be specific.

Why Should I Care? Get clear in the conversation about what the consequences are to their performance outcome….

what’s on the line…compensation, promotion, etc.

What Does Success Look Like? define what is good.

What Is above and beyond? How to beat expectations?Need To Talk About How They Need To Work: not just outcomes, but behaviors expected.

2 Way Process: both top-down and bottom-up commitment to goal from employee to boss means more commitment

(asking the boss, what do you see from where you sit? And vice versa). Leaders job is to listen to the employee.

Team: Dialogue on each member’s role – commitment to each other.

Broaden Through Outside-In: How do we set the right expectations? Strategy is a mirror, it should be a window –

looking out and looking beyond the strategy, how will our outcomes serve our customers – have you vetted the behaviors

with your customers? Will doing more of this generate more share of their spend – what if transparency is increased?

Outside-In Focus: In HR we can become too focused internally….how do our customers see us? – Value is defined by

the receiver of the service – we also need to anticipate the needs of our customers.

Include The Basics: Do we included day-to-day business activities in goal setting or do we only focus on the special

projects?

Top Down Vs. Bottom Up: what is the right tension between dictating outcome expectations and personal account-

ability through goal identification?

Aspirational Vs. Actionable: what is the right level of stretch?

u Suggested ExerciseHold a ½ day meeting – HR Facilitates – Information becomes transparent

• Everyone gets a flip chart

• List the 2 or 3 things that they want to accomplish in the next year

• Then everyone posts the charts

• Everyone gets a plus and minus sheet of stickers and votes

• Team develops list and then summarize below what we need to do more of or less of to accomplish the goals.

• Do not ignore the foundation work that has to be done


Criteria For Effective GoalsAspirational: Aspiration should lead to action –what we are trying to accomplish long term, clear sense of how the

organization is positioned to win.

Belief: How to connect the individual to the organization. It must translate to individual behavior to ensure personal

ownership.

Customer Centric: Increases mindshare and connection to clients; focus on outside in.

Developmental: How will I learn and improve to teach others? Set expectations that allow people to take risks and try

new things.

Failure: A company at an annual leadership meeting invited 10-15 high performers to attend, 5 had succeeded and 5 had

failed. The message was that it is ok to try new things, because innovation is important.

Energizing: Top-down and bottom-up, encourages and excites all stakeholders; becomes a personal, not imposed goal

Focused/Integrated: We often fail because we try to do to many things – employees should not have more than 5

things to focus on. Be willing to be clear about what work is not done. Offers a systems view.

Flexibility: How do we build in flexibility……how do you make sure that expectations are not locked in stone? When

there is an external trigger event that will requires a new review, we have interim discussions.


u Table Exercise – Participant Point Of ViewAssessing goal settingEach of the 5 areas of focus has a diagnostic tool for your organization. It will help your organization focus on areas that need










• Emphasize learning more than outcomes with goals.

• Translate organization goals into individual behaviors.

• Focus on a few priorities.

• Make certain the goals are aligned and integrated.

• Operate with a balanced scorecard.


Focus Area 2: Set Goals

Questions High Low

1 6 5

2 29 0

3 5 2

4 9 8

5 1 20

6 15 0

7 6 10

8 5 4

Average Score

Below 15 2

16–20 27

21–25 10

26–30 4

31–35 4

36–40 0

Set Clear Goals: Where are we going? 1 2 3 4 5


1. Operate with a balanced scorecard 1 2 3 4 5

2. Have aspirational or stretch goals that focus on the future 1 2 3 4 5

3. Translate organization goals into individual behaviors 1 2 3 4 5

4. Ensure that company and personal goals match customer expectations 1 2 3 4 5

5. Emphasize learning more than outcomes with goals 1 2 3 4 5

6. Allow individuals to set goals for themselves rather than to have goals imposed on them 1 2 3 4 5

7. Focus on a few priorities 1 2 3 4 5

8. Make certain the goals are aligned and integrated 1 2 3 4 5

Goals Average:


SECTION B3: IDENTIFY MEASURES

Measures have an individual and collective point of view. Each one has measurements for behaviors and outcomes. Measures

are most effective when done job by job asking what type of work is done and in conjunction, what are the most meaningful and

related measures. It seems simple, but in fact is a complex exercise.

u Slide 35Overview and Description of Boxes

• BOX 3 – Individual, Behavioral Measures: In some jobs individual behaviors are absolutely critical. This is what people

do… Customer service. It’s not courteous or nice, just need to be more concrete - Do they greet in 3 seconds? What do they

say specifically? Evaluating work outcomes and evaluating work behaviors are the only things that can really be judged.

Good coaches talk in behavior-based language and take that to the next level when talking about what is expected behav-

iorally from leaders.

• BOX 1 – Collective, Behavioral Measures - A little more difficult to get at. Don’t let others in or out of the collective fail.

This is really about a team. Consider doing a team audit; how do members share information, risk, resolve conflict, manage

customer expectations?

• BOX 4 – Individual, Outcome Measures– 360s. Never have someone fill it out unless they have observed that behavior.

For leaders we should do 90s, ask direct reports about how well they do performance management, develop talent, and

manage compensation decisions. These types of feedback tools outperform assessment centers 2 to 1 at 1/20th the cost. A

caution is that the feedback must be used for action….there is a real danger in asking for the feedback and not executing

decisions based upon it.

• BOX 2 – Collective, Outcome Measures - Customer success, (Refer to page 31) scorecard is historical, a lag indicator.

There are 4 areas that leaders are responsible for: Financial Success, Customer Success, Business Processes, Workforce Suc-

cess (Do you export talent…bonus them, and do a claw back on bad exports?) Analyzing new ways of looking at work – it

should clearly tie with strategy of organization.

Use this tool to discuss by job what the right mix of measures should be. When creating metrics no box should be less than 10%

and no box should be more than 60%.

Behavior Measures Outcome Measures

Collective Measures 1

Team Process(e.g., team audit)

2Team or Organization Performance(e.g., customer satisfaction; on time delivery; results)

Individual Measures 3

Individual Actions(Using More of/Less of)(e.g., competencies)

4Personal Outcomes(e.g. annual goals; units produces; ales quota results)

Type of JobMETRIC QUANDRANT Job Title Job Title Job Title Job Title

1 Team Process:

2 Team Outcomes:

3 Individual Behavior:

4 Individual Outcomes:

100 100 100 100


u Outside-In Focus with Metrics:If we are really going to be strategic, we need to start with asking the question about the work itself. What really impacts the

creation of customer value?

• Work is easy to create and hard to kill

Every time you serve a customer you should ask 2 questions:

• How are we doing on delivering X to you?

• How important is X to you?

Not all customers are created equal, so focus on the customers that are key to your growth strategy. Are they stretch customers,

profitable core or are they problems (those who cost more to serve than the revenue generated)?

Key Take-Aways from Group Dialogue:• When trying to determine the importance of the metric, engage stakeholders to understand its impact.

• It’s important that whatever it is, it should be simple.

• Should be based on evidence and facts.

• There is not one size that fits all.

• For example, a nurse was spread out, but project manager is more weighted to team, while the receptionist is very

individual-based.

• HR Directors are measured against team results, but what about their behavior?

• It is first about goals, weights and then targets.

• It is also about cascaded objectives. The folks that report through an individual, should have similar plans.

• Given unique cultures, decide how much flexibility there is in setting metrics by role.

A Metrics-driven organization ties its vision and strategy to four key areas:

Vision and Strategy

Financial“To succeed financially, how should we appear to our shareholders?”

Learning and Growth

“To achieve our vision, how will we sustain our ability to change and improve?”

Customer“To achieve our vision, how should we appear to our customers?”

Internal Business Processes

“To satisfy our share-holders and customers, what business processes must we excel at?”


Example P: A weighted balance gave us the tool we needed to help team leaders balance their focus.

Examples of future metrics:

• Before promoting from inside the org, interview 3 people from the outside to understand how good the internal person is.

• How do we deal with this in such a fast changing world? Be open to renegotiating frequently and often. Goals and metrics

have to be a living document, an ongoing conversation, not a static point in time.

• Increasing use of virtual teams also has an impact on measuring performance and behaviors. Clearly defining expected

outcomes enables virtual teaming.

Current

TO

Future

Look at performance in one time period See performance over time

Focus on the score Focus on the improvement of what is right for customers and organization

9 box (you are in a bucket) Measure learning and growth

Compare to others Compare to self and meeting your targets

Management by objectives (Push) Management by mind-set (Pull)

Track lag indicators Identify and track lead indicators

Looking to the future of performance management metrics, the focus is shifting:


u Table Exercise – Participant Point of View

Metrics AssessmentEach of the 5 areas of focus has a diagnostic tool for your organization. It will help your organization focus on areas that need










• Measures that are flexible that can be changed rapidly with changing busi-

ness conditions.

• Have a conscious (right) mix of individual vs. organization measures.

• Share the process of creating the measures, so that employees know and

own what is expected.

• Be transparent about measures so that they are visible and understood.


Focus Area 3: Ensure Measures

Questions High Low

1 10 5

2 4 4

3 9 2

4 8 2

5 8 5

6 6 1

7 6 5

8 0 15

Average Score

Below 15 0

16–20 3

21–25 15

26–30 12

31–35 1

36–40 0

Identify Measures: How do we know if we are getting there? 1 2 3 4 5


1. Have a conscious (right) mix of behavior vs. outcome measures? 1 2 3 4 5

2. Have a conscious (right) mix of individual vs. organization measures? 1 2 3 4 5

3. Track organizational performance over time to see progress? 1 2 3 4 5

4. Track personal profess and learning? 1 2 3 4 5

5. Measure organizational lead indicators? (e.g., grievance, undesired turnover) 1 2 3 4 5

6. Share the process of creating measures, so that employees know what is expected 1 2 3 4 5

7. Be transparent about measurees so that they are visible 1 2 3 4 5

8. Measures are flexible and can change rapidly with changing business conditions 1 2 3 4 5

Identify Measures Average:


KEY TAKE-AWAYS FROM DAY ONE

• Maybe we need to turn it around and start with feedback first, focus on the conversation and not the process.

• We only control a piece of it, everyone in the organization plays a role to improve the experience.

• Feedback is embedded in a culture of candid conversation.

• Maybe we don’t have to have a one-size-fits-all in the company, we have different business models, why not different perfor-

mance management methods? We can differentiate our process, basic principles of what’s consistent and what’s different.

Global consistency and local adaptation by employee group or type.

• No big new ideas – how to shift and create new thinking in this area of practice – more often than not it is an evolution

rather than revolution.

• There are 2 new things, the advent of social media and predictive analytics that could cause revolution in this field.

Going back to your office, you are in a meeting discussing Performance Management, what do you need to consider? How do

you help your peers think through what’s necessary:

u Why, build the case for doing PM• Talent - It will improve the talent in the company

• It will increase a culture of accountability and deliver strategy

• It will increase the credibility of leaders

u Why not, what are the barriers• Create a typology of what goes wrong

• Outcomes in the wrong way

• Too focused on process and not outcomes

u New process requirementsa. Simplicity –

• Use technology to simplify the process, make less bureaucratic and more streamlined

• Focus on key individuals who can be helped the most

• Build an integrated system, not parts, and connect to other HR processes

• Have consistency and flexibility

b. Information –

• Use PM to access information

• Look backward (review) and forward (preview)

• Define the right work to do (what) and the process (how)

• Create workforce analytics

• Document

c. Accountability –

• Hold line managers accountable . They do budgeting, planning, etc., and should do performance management. People are the most

expensive resource.

• Flexibility and adaptability – can our process change to adapt quickly to business conditions?


u Performance Management Pyramid

Conversation is at the heart and must take place during each phase.

Setting Goals: Clarify Expectations

Identify Measures: Establish Metrics and Standards

Ensure Consequences: Allocate and Ensure Consequences, both financial and non-financial

Provide Feedback: Engage in Conversation

• What are a set of decisions or choices in each of the four areas?

• Are we conscious about the choices we are making? – choices around expectations and conversations between leaders,

employee, and peers?

• Future or past (what we’ve done or where we are going)

• Flexible vs. rigid

• Learning vs. outcomes

• Organization vs. individual

• Outside vs. in

• Top down vs. bottom up

• Personal values vs. organizational demands

A test would be to what extent do people in the organization have the same expectations as leadership.

END OF DAY ONE

Engage in Conversation

Allocate/ Ensure

Consequences

Establish Metrics/

Standards

Clarify Expectations


SECTION B4: ENSURE CONSEQUENCES

• How do we make our strategy happen

• Strategy should drive the work and metrics

• Metrics should drive consequences – 3 levels

• Organization wide

• Groups and teams/projects/business lines

• Individual

There are both positive and negative levers that you can use to ensure consequences. What are you using and what could you use?

u Table ExerciseThink about a strategic job in your organization and consider what levers you are currently using in your organization.

Key Take-Aways• We are not very clear on consequences as a scale, it’s all or nothing

• Consequences are part of the conversation

• We try and shape behavior by giving feedback, so what are the consequences that you’re using to do that?

• We love to identify the metrics and measures, but we don’t spend enough time on consequences (reference: Steve Kerr)

• What are we trying to reinforce? May want to do it in public and not privately

• Link the consequences with overt success factors

Positive Negative

Financial 1Pay for performance

2Loss of economic opportunity

Non-financial 3Work itself (low const, no cost rewards/recognition)

4Public pressure

Examples of Behaviors

Coming up with a trying out new ideasExceeding your authority to get the job doneBending the rules when necessary to get the job doneViolating the chain of command when necessaryGoing along with boss even if wrongAlways going along with the majority view

Presenting your boss with unpopular viewAchieving your group’s goals at the expense of another unitySetting easy goals and then making them Maximizing short term at the expense of long termEtc.

Measures/ Behaviors

Consequences

Positive (+) Reward or Approval

Negative (-) Punishment or Disapproval

Unpredictable, Don’t Know / Can’t Detect Total: 10 points

Quality =10

Innovation =10

Service =10

Other? =10


• Helps to clarify and accelerate behavior

• To get different outcomes, do things differently and manage consequences

• Risk and consequences are critical elements to infuse innovation in a culture

• Value of the conversation, and what is the consequence for people giving discretionary effort – it drives higher engagement

• Punishment is ineffective because it does not ensure getting the right behavior – rewarding the right behavior is much more

impactful

u Examples of Financial and Non-financial Awards

Ideally what you’d like to do is make all rewards self-funded…we don’t pay out rewards if we haven’t earned them versus the

government approach when you have a set pool of money that you pay out regardless of performance.

Performance variability is most critical for key positions. This means that differentiation and consequences are important.

Example:Questions for Key Talent and Positions:

• Are they in the right job?

• Do they need more training?

• Do we need to move people out?

• There needs to be a conversation on consequences.

• What’s the root cause of the poor performance?

Financial Non-financial

Base salaryCash bonusStock bonus (equity)Team payGain sharingCost sharingLong-term/short-termHidden financial (e.g., health club ben-efits, car, travel, vacation, etc.)

Time offWork flexibilityPraiseInvolvementSuggestion systemsGiftsAssignmentsBetter assignmentsAssignment to task forces

Attend trainingExposure to senior management travel/tripsVisibility with bossLetter of appreciationSelect teammatesMore flexible hoursRespect of peersOffice location

Current

TO

FutureRegular reviews (quarterly, annual) Real time reviews/preview

Tie to performance and total compensation Tie to potential and career opportunities

Allocate rewards Manage communication messages

Focus on financial Add focus on non-financials

Focus on moving to future state of consequence management:


u Table Exercise – Participant Point Of ViewEnsure ConsequencesEach of the 5 areas of focus has a diagnostic tool for your organization. It will help your organization focus on areas that need










• Pay attention to intangible value with investors.

• Use consequences to communicate messages of what matters most.

• Have a clear link between standards and consequences.

• Have appropriate mix of compensation tools.


Focus Area 4: Consequences

Questions High Low

1 4 6

2 16 1

3 7 3

4 6 7

5 2 12

6 19 2

7 1 11

8 13 1

Average Score

Below 15 0

16–20 1

21–25 7

26–30 16

31–35 8

36–40 0

Ensure Consequences: What happens if we hit of miss standards? 1 2 3 4 5


1. Have a clear link between standards and consequences? 1 2 3 4 5

2. Have pay for performance? 1 2 3 4 5

3. Have discussions of performance for financial gain? 1 2 3 4 5

4. Have appropriate mix of compensation tools? 1 2 3 4 5

5. Use consequences to communicate messages of what matters most? 1 2 3 4 5

6. Differentiate low vs. high performers? 1 2 3 4 5

7. Pay attention to intangible value with investors? 1 2 3 4 5

8. Have discussions about career opportunities based on current performance? 1 2 3 4 5

Ensure Consequences Average:


u Review DiscussionWhen we sit down with a team that is interested in improving performance management, what do we do?

Discuss• Why do we do it?

• What are the barriers?

• What is it?

• Clarify expectations

• Standards and measures

• Ensure consequences

• Engaging conversation (feedback)

Example

Group Discussion:What are 2 or 3 things out of the consequence discussion that the team should discuss?

• Is there transparency in the communication of consequences?

• Are we sending a message of differentiation or similarity?

• Are we using financial rewards to reinforce culture?

• The money consequence is too late, c

• Are we managing the non-financial opportunities in an ongoing process?

• Do our standards tie to consequences – what people deliver and what they get?

Maximizing Employee Performance Impact on Customer Success Scores

This company, highly regarded for its customer service, surveyed about 45,000 customers to gauge the impact of its 4,583 service reps. it discovered that the top 10% had a positive effect on cus-tomer attitudes with 71% of the customers they talked to; the top 7 reps created a positive effect with every customer. In sharp contrast, the bottom 10% had a net nega-tive impact of 14% on customer attitude scores, while the bottom 3 employees alienated every cus-tomer they spoke with.

+100%

+80%

+77%

+71%

+61%

+40%

+27%

+2%

-31%

-63%

-100%

-14%

Total 7 reps

Top 1%

Top 5%

Top 10%

Top Quartile

2nd Quartile

3rd Quartile

Lowest Quartile

Bottom 10%

Bottom 5%

Bottom 1%

Bottom 3 reps

The

Bes

t

The Worst


SECTION B5: PROVIDE FEEDBACK

u Feedback• What is our philosophy of management?

• This philosophy will drive the culture

• When someone in our organization moves from individual contributor to manager, does our company have a set of beliefs

about the transition and new role?

• What you do is less important than getting things done

• Threat is less useful than rewards (job as a leader is to make people feel better about themselves)

• Outcome is less relevant than the effort (opportunity for learning and risk)

• Allocation of time is critical, what you say is less important than where you spend your time

• Walk the talk

• Inclusive – work with others, how do you include others in the process to get work done

• Leadership matters more than individual leaders

u Feedback Conversations1. Clear view of what is leadership

2. Can you have a productive conversation?

u Group DiscussionWhat are the elements of a productive conversation?

• Listening – 2 way, split of listening and speaking 50/50, may need to flex depending on topic and audience. Be open, inclu-

sive, encourage people to speak, ask questions, nodding your head, repeating what you’re hearing. Ask them to discuss how

they see themselves and what they want.

• Preparation – Think about what you want to say, what’s the objective of the discussion, helps to keep it on track, out-

comes for me and for the other person – should be balanced. What questions you want to ask, what information you want

to make sure you share. Beware of being too scripted, you may stop listening. Give the other person a chance to prepare as

well. Enabling HR partners to rehearse with the managers the conversation, role play and practice talking through different

scenarios.

• Objectivity – Don’t attack the person, but focus on the behavior. Build a safe environment, assume no ill intent up front.

Ask “Help me understand” or “help me understand the data” so that we can fix it.

• Transparency – Credibility and authenticity needed. Build a relationship of trust – starts with being open with each other.

John Gottman – predicts with accuracy in 15 minutes how to handle the horseman, if scornful, contempt, condescending,

etc. Doing this is part of helping our leaders learn how to be calm and compassionate.

• Focus on the positive – Martin Seligman, highly productive conversations and relationships have a 5:1 ratio – they need

to have 5 positives for every negative, find grounds of common agreement. Doing this is correlated to high performing teams

– express gratitude and your satisfaction and happiness will go up.

• Timely – Be immediate, allocate enough time for the dialogue, be present, and remove distractions.

• Focus on the future not the past – What does follow-up look like? Focus on feed forward, let’s look at what you want

to do in the future, individual follow-up and action planning. Don’t do a leadership program without designing in follow-up

phase (example have a one hour teleconference with your team about what you’ve learned and commitment to change).

Consider having coaches, increases learning from 20 to 60%. Finish conversation with an action plan.

• Public or Private – A leader needs to know when to address feedback in public (usually for praise) and in private (usually

for corrective).


u How Do I Help My Leader Get There?1. Hire the leader that has the skills

2. Develop or train for the desired leadership skills

3. Leader as a coach versus command and control

I Don’t Have Time to Coach – As an HR Leader How Do You Respond:• You don’t have time not to coach.

• Multi-task: Embed conversations with other activity.

• What can you absolutely not delegate and then move off the other activity.

• It will give you more time moving forward.

• Look at your calendar and schedule time for conversations.

• How did you get to your level, did someone coach you to get you where you are?

Seven Keys to Sustaining Change:

Sustainable Practices (Based on research)

Key InsightLeadership sustainability increases when leaders . . .

Simplicity Focus on a few key behaviors that have high impact

Time Put their desired behaviors into the calendar and they show up in how they spend their time

Accountable Are personally and publicly accountable for making change happen

Resources Support their desired changes with coaching and infrastructure

Tracking Measure their behavior and results in specific ways

Meliorate Constantly improve by learning from mistakes and failures and demonstrate resilience

Emotion Have a personal passion and emotion for the changes they need to make

Leader’s Mind-set: An effective leader as coach focuses on . . .Command and Control (Gives direction) Coach and Communicate (Asks questions)

What I want you to do now is . . . What do you think you should do?

You should have done . . . Looking back—how would you do it differently?

That won’t work; it will upset clients . . . What do you think the effect on clients may be if we do that?

You need to get this done . . . How can I help you make this happen?

You must change . . . How can I help you change/?


If We Know What Needs to be Done, Why Don’t We Do It?David Rock’s work on basic brain function outlines that we respond to situations on a continuum of a Threat or Reward

response. Giving feedback most often triggers a threat response. What can we do to minimize that response and increase the

positive reward response which then increases the effectiveness of the message?

Reward Response

Threat Response

The SCARF Model works on a continuum of response, move away and you invoke a threat response, move toward and you invoke a reward response.

S: StatusC: CertaintyA: AutonomyR: RelatednessF: Fairness

Relative importance, ‘pecking order’ and seniorityPrediction is possibleSense of having choicesSense of belongingFair exchanges are intrinsically rewarding

SCARF (Model of Social Threats and Rewards)

Source: David Rock 2008


u Table Exercise – Participant Point of ViewEnsure ConsequencesEach of the 5 areas of focus has a diagnostic tool for your organization. It will help your organization focus on areas that need










• Focus feedback more on effort than results.

• Pay attention to leadership sustainability.

• Practice open book (transparent) information flow.

• Do real time follow up and feedback.


Focus Area 5: Feedback

Questions High Low

1 4 14

2 0 25

3 14 12

4 14 2

5 4 3

6 7 12

7 2 5

8 12 7

Average Score

Below 15 0

16–20 2

21–25 22

26–30 9

31–35 1

36–40 2

Feedback: How do we follow up? 1 2 3 4 5


1. Have a clear link between standards and consequences? 1 2 3 4 5

2. Have pay for performance? 1 2 3 4 5

3. Have discussions of performance for financial gain? 1 2 3 4 5

4. Have appropriate mix of compensation tools? 1 2 3 4 5

5. Use consequences to communicate messages of what matters most? 1 2 3 4 5

6. Differentiate low vs. high performers? 1 2 3 4 5

7. Pay attention to intangible value with investors? 1 2 3 4 5

8. Have discussions about career opportunities based on current performance? 1 2 3 4 5

Feedback Average:


u Summary Group DiscussionWith so much expertise in the room we asked the participants to share a best practice from their organization:

What Do You Do Well:• Deutsche Bank – Metrics/calibration: we have perfect system, we have a responsibility to teach them, the leaders have

to do it and track.

• CGI – Consequences: you had to sign a code of ethics…if you don’t sign it by the end of the month, we won’t pay the

bonus (senior leaders often have to chase the employees to sign it).

• ADIA – Goals: the team calibrates activities with each other and agree on how that links to the bigger organization and

then that is shared with the leaders.

• Goldman Sachs – Consequences: from a cultural perspective, if you do well, you will be very well compensated through

bonuses.

• UBS – New Strategy: everyone is very clear about what it is and what needs to be done, expectations are very clear

throughout the organizations.

• Hilton – Feedback: process is timely and very transparent.

• Yum! Brands – Consequences: has many ways to reward timely, publically and privately, gift cards, prizes etc. – In the

restaurants we have a young workforce and we call their parents, it’s a great reinforcement.

• Accenture – Consequences: red carpet events, the parents are invited, there are tears and it was touching.

• AXA – Measures: maybe we do it too well. Very clear definitions around all the measurements, but it’s HR led, but we

don’t focus on the other parts of the triangle

• BAT – Expectations: we have rebuilt/redefined “high potential” and what that means.

Current

TO

Future

Performance conversation at one point in time Performance conversation in real time (ongoing) around events (promotion, salary)

Focus on ability (you are smart) that creates a fixed mind-set Focus on effort (you work hard) to create “growth” mind-set. Praise effort as well as results.

Look back to emphasize performance (you are good at . . . ) Look forward to see opportunity and create learning (you have done what, what did you learn that you can apply)

Emphasize what is wrong Focus on what is right

Leader as command and control Leader as coach/capability builder

Focus on action Focus on sustainability of actions

Focus on moving to future state of consequence management:

SECTION C: SPEED TEACHING

What questions do you have that have not been covered during our session:

u Company AWe have been doing a lot of personnel cuts over the last few years, how do you keep folks motivated when ratings are going

down and they asked to do more? How do you manage high-performing and low-performing team calibrations?

• Individual calibration is a mistake; needs to be done, but must be done within the organization context. For example, Ed-

die the Eagle was a Brit and he wanted to be an Olympian and he was the best ski jumper in Britain, which got him to the

Olympics. However when compared to other Olympians, his performance was very low. After his performance, the Olympic

committee instituted minimum requirements to qualify for Olympic competition.

• Downsizing – pay attention to those who are staying, not those who leave. You must also get rid of the non-essential work

that is punishing for those who stay. Be BOLD, make it quick, go deeper, for those who leave, treat them with respect – rec-

ognition for key players becomes even more important – use a “stay interview” with the top player (what’s it going to take to

keep you), let them go and encourage them to come back when it doesn’t work.

u Company BHow do you measure behavior vs. outcomes?

• Northrup Grumman -Clearly define leadership characteristics and rate employees against those behaviors. Individuals and

managers rate each other and the focus is on what it looks like by level.

• Do “more of/less of” exercise. What can you actually see? Do it in your work teams. Once defined, those behaviors become

measureable.

• Use your best people to help define at 3 levels, outstanding, neutral and low.

• If we are having trouble measuring something, go to finance and have them spend 30 days with the HR scorecard and get

their feedback.

• You can start with what behaviors we don’t want to see and identify what we do want to see. Don’t hesitate to go to the

customer to determine those behaviors. Make sure to tie it back to the strategy.

© 2013 The RBL Group, Inc.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any

means, electronic or mechanical, including photocopying, recording, or using any information storage

or retrieval system, for any purpose without the express written permission of The RBL Group, Inc.

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OU

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