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Fine-Tuning Performance Management
at UPS Fine-Tuning Performance
Management at UPS
By Mary Franz
UPS by the Numbers
•• 2012 revenues: $54.1 billion
•• 399,000 employees serving
8.8 million customers
•• 4.1 billion packages delivered
in 2012
•• 96,173 vehicles in delivery fleet
•• Operates one of the world’s
largest airlines, with 1,931
flight segments daily
Whether enabling an online shopper to reschedule a delivery via Facebook or
ensuring the safe shipment of temperature-sensitive vaccines to a remote corner
of the globe, the seamless simplicity with which UPS serves its customers belies
the complexity of its operations. As it successfully transformed itself from a U.S.
package delivery company to a global leader in supply chain management and
logistics, UPS has depended on its ability to manage the performance of its most
important asset: its workforce.
“Our employees strive to perform at the highest possible level, and performance
management is about how we reward employees for doing just that,” said John
McDevitt, senior vice president of human resources and labor relations at UPS.
“Performance management is the engine of our organization,” said Mike Johnson,
vice president and chief human resource officer. “At its core, performance
management reflects our ability to engage employees around a common set of
goals and objectives, and to measure how effective we are at getting employees
to meet those goals.”
Performance management has been part of UPS since the company’s founding in
1907, but today it’s more important than ever. The reasons: a highly competitive
global business environment, heightened customer expectations and increasing
job specialization in areas ranging from logistics engineering to analytics.
To maintain its leadership position in this dynamic environment, UPS recognized
that it needed to focus more sharply on engaging and retaining top-performing
employees. “We wanted to hold true to the concept of partnership and teamwork
while recognizing the different degrees of contribution,” said McDevitt. “We
also wanted to help our people understand how their individual performance
contributes to the success of their team, business unit and company overall.”
Consequently, in 2011, UPS started on a journey to more clearly differentiate
the contributions of each employee and to better align pay and performance
through the introduction of a new base pay system. But early employee feedback
from surveys, focus groups and informal communications revealed that some
employees were struggling to understand the change.
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John McDevitt,
senior vice president,
human resources and
labor relations, UPS
Towers Watson consultant
Emma Flack (far right)
with UPS executives
(left to right) Leslie
Follman, succession
management supervisor;
Justin Brennan, learning
project supervisor;
Laura Collings, training
communications
manager; and Amy
Mancilla, global learning
network manager
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“Employees weren’t fully making the connection
between performance and rewards,” said Laura
Collings, training communications manager.
“There was a gap.”
UPS leaders quickly realized that while much time
and energy had been invested in designing a new
compensation process, there was more work to be
done clarifying some employees’ misconceptions
about performance management in general and, in
particular, how individual performance goals would
be set and measured. “It was natural for us to turn
to our partners at Towers Watson to help us think
through this challenge,” said Johnson.
A carefully orchestrated communication and change
management initiative that reached UPS’s 40,000
full-time management employees in the U.S.
helped to turn the situation around. By delivering
communications tailored to the needs of various
employee groups at the right time and via the right
channels, the leadership was able to bridge the gap
in employees’ understanding of the link between
their individual performance and their rewards.
The Disconnect
In seeking greater alignment between performance
and rewards, UPS set out to strengthen its already
substantial focus on performance. In the past, UPS
had relied on an egalitarian approach to people
management and rewards, emphasizing loyalty,
commitment and effort over individual performance
and results for the current year. It now intended to
move to a performance management strategy that
placed a high value on differentiating and rewarding
individual performance in a given performance
period. “UPS needed to create a ‘rewards for
performance’ environment, and this required a shift
in its performance culture,” said Towers Watson
senior consultant Danielle Rasey.
A number of issues contributed to the challenge.
“There were basic misunderstandings about
the process,” Collings said. Anne Schwartz,
vice president of global leadership and talent
development at UPS, added, “The phases of the
performance management process weren’t viewed
holistically as part of a yearlong cycle.” Many
employees regarded performance management as
a once-a-year activity involving the completion of an
online assessment form.
Not only did employees view performance
management as a one-off annual event, they
didn’t fully understand their role in the process.
Consequently, some managers weren’t spending
enough time coaching employees, helping them set
goals and providing feedback throughout the year.
And many of their reports regarded performance
management as a manager-driven process in which
they played a limited and largely passive role.
Planning a Course Correction
UPS had only a few months to plan and implement
a course correction before its 2012 year-end
evaluations and goal setting for the coming year
got under way. “We needed to act quickly to ensure
that employees at all levels — from the part-time
supervisor to the senior executive — understood
the different components of the performance
management process and the relationship between
rewards and performance,” Collings said.
An interdisciplinary team with specialists from
key areas including learning and development,
compensation and organizational development was
formed to design a communication and change
management initiative. Its objective was to educate
UPS employees at all levels about the value of
performance management, their respective roles
in the process and how they’d be rewarded for
the success they helped to create. The primary
requirements included:
“Not
“
only did employees
view performance
management as a one-off
annual event, they didn’t
fully understand their role
in the process.”
•• An easy-to-access, single source of information
about the performance management process
•• Clear, consistent, ongoing communications
delivered via multiple channels
•• A training curriculum and tools, tailored for
various employee audiences, focused on sharing
information and building skills related to the
performance management process
Cultivating a PerformanceOriented Culture
Two principles guided the effort: Keep it simple, and
be transparent. “We needed to make sure that the
materials would be understood by frontline workers,
not only by leadership,” Schwartz said. The team
conducted a stakeholder analysis to identify the
actions required of each workforce group, as well
as their information needs. Leaders in corporate,
HR and the business units served as change
champions, providing overall direction to employees.
HR area managers acted as subject matter experts,
providing detailed information to employees on the
performance management cycle.
The components of the communication and change
initiative included:
•• Performance management web portal. As the
central repository of performance management
materials, the portal puts accurate, up-todate information at the fingertips of the entire
workforce and helps to convey the importance
of performance management. The easy-tounderstand materials include FAQs and emphasize
action items, thereby helping employees
understand the steps they need to take.
“We knew we’d have to put a team together very
quickly. Towers Watson already understood the
journey we were on and where we wanted to go,
so we brought them in right away,” Schwartz said.
Strategy at Work 5
•• Performance management training program.
The team developed an online training program
that all employees were required to complete in
preparation for year-end performance reviews and
goal setting for the coming year. The program,
consisting of a series of short, engaging Flashbased modules, explains the year-round cycle
of goal setting, continuous feedback, evaluation
and rewards, as well as the roles of managers
and employees in the cycle. Also included is a
library of skill-based training materials related to
performance management.
•• Customized communications. Borrowing from
consumer marketing, the team developed
communications and activities tailored to its
different audiences. For example, HR leaders
attended webcasts that prepared them to
deliver consistent messages about performance
management.
The Big Lesson Learned: It Takes an
Interdisciplinary Team
UPS leaders assembled a strong interdisciplinary team to spearhead
the performance management project. The team consisted of a
project manager from UPS and representatives from UPS’s learning
and development, corporate communications, compensation and
organizational development functions. Towers Watson communication
and change management consultant Emma Flack was embedded in
the team three days a week for roughly six months. Towers Watson
senior consultant Danielle Rasey served as the strategic advisor guiding
overall efforts and deliverables. This interdisciplinary project team was
critical to the project’s success.
The primary benefits of such a team include:
•• Ongoing collaboration. This type of team facilitates collaboration
among various groups, leading to a quicker resolution of important
issues. For example, at UPS, feedback from market research about
gaps in employees’ understanding of performance management
was quickly communicated to team members from learning and
development. They ensured that these issues were addressed in the
new performance management training modules.
•• Ready access to subject matter experts. With subject matter
specialists on the team, expert knowledge was available when and
where it was needed.
•• Sustained change. Because the team was staffed largely by
UPS employees, its members continued to own the change after
completing the formal project, which is essential to sustaining the
strengthened link between performance and rewards.
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The team also created materials to meet
managers’ needs: a detailed brochure on
performance management at UPS, manager
checklists of performance management activities
and discussion guides to help managers have
the right performance-related conversations with
employees.
Finally, all employees had access to the
performance management website, the training
materials, a performance management overview
brochure and FAQs organized by topic. Email
distributed company-wide reminded employees
about performance management milestone dates.
For example, to help prepare employees for their
year-end evaluation conversations with managers,
the team developed a visually compelling, concise
email reminder that included a link to the new
performance management web portal.
•• New visual identity. The team also created a set
of templates to ensure that all materials — from
the training modules to the brochures — had a
consistent look and feel, making performance
management content easy to recognize. And
a new, eye-catching graphic identifier helped
employees visually understand the performance
management cycle and easily spot performance
management materials.
The team worked tirelessly to ensure that all of
its messages were simple and transparent in
keeping with the project’s main principles. The
communication campaign stressed that performance
management is a shared responsibility between
managers and employees. Other messages focused
on bridging gaps in employees’ understanding of
performance management elements, including:
•• Goal setting. Goal setting helps ensure that
managers and their direct reports share an
understanding of individual performance
expectations for the coming calendar year and
how progress against the goals will be measured.
•• Continuous feedback. Ongoing formal and
informal feedback aids in assessing day-to-day
individual performance and identifying areas for
improvement. Performance-related discussions
are most effective when employees at all levels
are open to receiving and providing feedback.
•• The link between performance and rewards.
Ongoing feedback, and formal midyear and yearend evaluations, help employees understand how
well they’re meeting expectations and how they’ll
be rewarded for contributing to UPS’s success.
Rewards can be financial and nonfinancial, and
include merit pay as well as recognition (e.g.,
awards and gift certificates for achievements),
skill development and career advancement
opportunities.
The team’s efforts were well received. “Employees
were pleased with the consistent, easy-tounderstand messages. And as a result, they were
able to develop a better understanding of their
responsibility in the performance management
process,” Collings said.
Delivering the Change
How did UPS gauge the success of the effort?
•• In its first two months of operation, the
performance management web portal generated
over 130,000 visits, reflecting the effectiveness of
the new site.
•• A question was added to the company-wide
employee engagement survey to gauge
employees’ understanding of the performance
management process. It scored an 85% favorable
rating.
•• Over 26,000 management employees completed
the performance management training by the
deadline, a notable accomplishment considering
that this training took place during the holiday
season, UPS’s busiest period.
•• 98% of eligible employees received a performance
evaluation within the required time frame using
guidelines from the training program.
with minimal detours.” Johnson concurred, adding,
“Our Towers Watson consultants helped us to think
more broadly about the issues we were tackling. And
in addition to their expertise, they brought us very
useful data.”
“There’s
“
now much greater clarity around how
individual performance is measured and how
everyone’s performance collectively helps UPS
achieve its objectives.”
The Ongoing Journey
The successful communication and change
management initiative enabled UPS to build the
foundation for its ongoing performance management
journey. “I don’t see a conclusion to this project;
at UPS, we’re always constructively dissatisfied,”
McDevitt said. UPS plans to regularly review and
refresh the performance management web portal,
training modules and communication materials.
“We’ll continue to listen to employee feedback and
to make necessary changes to messaging and
processes,” Collings said.
UPS leaders believe that when performance
management is done right, everyone wins. Individual
and team performance improves, customers are
satisfied and the company sharpens its competitive
edge.
“There’s now much greater clarity around how
individual performance is measured and how
everyone’s performance collectively helps UPS
achieve its objectives,” Johnson said. “UPS has
always had a high-performance culture. The real
change for us is that we now have a stronger, more
effective mechanism in place to determine whether
our employees are aligned around the company’s
performance objectives.”
“Towers Watson provided a valuable external
perspective,” McDevitt said. “We were coming to
a fork in the road, and Towers Watson consultants
gave us good direction at a time when we wanted
to get from point A to point B as quickly as possible
Mike Johnson, vice president and chief human resource officer, UPS, with Anne
Schwartz, vice president, global leadership and talent development, UPS (left),
and senior Towers Watson consultant Danielle Rasey
Strategy at Work 7
About Towers Watson
Towers Watson is a leading global professional services
company that helps organizations improve performance
through effective people, risk and financial management.
With more than 14,000 associates around the world,
we offer consulting, technology and solutions in the
areas of benefits, talent management, rewards, and
risk and capital management.
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