Is Employee Performance Management
Performing?
Exploring the Latest Findings from the Field
February 8, 2005
February 8, 2005
Presenters
Dr. Katherine Jones
Mr. Clinton Wingrove
Research Director
Enterprise Applications
Head of International R&D
Performance Management
CEO and Principal Consultant
AberdeenGroup
Pilat (North America) Inc.
February 8, 2005
Agenda
• Duration: 60 minutes
• Dr. Katherine Jones – Research from the Field
• Mr. Clinton Wingrove – Real World Experience
• Questions & Answers
• Download Slide Presentation
February 8, 2005
Grandstand Performance
Management:
Managing Employees
for the Performance-Driven Enterprise
Dr. Katherine Jones
Research Director
The Destination of Choice
for Actionable Research
Agenda
• Key Issues in EPM Today: The HR Exec’s Agenda
• Challenges for Improvement
• Moving to Best in Class in EPM
• Next Steps for an Performance-Driven Enterprise
© 2004 AberdeenGroup • 5
The HR Executive’s Agenda on EPM
Link payouts to total company revenue
acquisition
What Keeps
Them Up
at Night
3
Link payouts with employee performance
Ultimately measure the degree of alignment
between the workforce and overall corporate
performance
1
Align individual behavior and work with corporate
goals or scorecards
Compare employees to their peers for
ascertaining raises and bonus distribution
2
Improved ability to improve an employee’s skill
levels and career path within the organization
More accurate record keeping on employees,
their skills and their performance
Improve data collection in case we ever had a
performance issue leading to the need to
terminate an employee
0
20
40
60
80
Percentages
100
120
© 2004 AberdeenGroup • 6
Prioritized
Pressures
•
Align individual behavior and work
with corporate goals or scorecards
(83%)
•
Increase ability to improve an
employee’s skill levels and career path
within the organization (82%)
•
•
Link payouts with employee
performance (80%)
More accurate record keeping on
employees, their skills, and their
performance (79%)
•
Ultimately measure the degree of
alignment between the workforce and
overall corporate performance (75%)
•
Link payouts to total company revenue
acquisition (70%)
Prioritized
Strategies
•
Communication of core business
objectives across the company (89%)
•
Implement a culture of continuous
improvement (89%)
•
Alignment of employee and
department behavior with corporate
goals or scorecards (86%)
•
Improve employee morale and
retention (85%)
•
Improve reward structure to retain top
performers (84%)
•
Delivery of competitive services to
better retain employees (65%)
© 2004 AberdeenGroup • 7
The required organization or potential
process change is not w arranted by
the expected benefits
Impediments
to be
Overcome
Internally w e are not ready for
evaluating performance beyond its
demonstration at the department level
Not considered a strategic initiative or a
top business priority
Insufficient aw areness of the value
potential of aligned goals to go forw ard
No compelling business value
proposition has been developed to
support this
0
10
20
30
40
50
Percentages
© 2004 AberdeenGroup • 8
What Research Tells Us: Status Today
• 90% of the respondents see improved employee
performance management as a key to gaining competitive
advantage.
• 82% percent say that their employees’ work objectives
are tied to corporate goals.
• 64% think employee achievement should be tied to
demonstrable revenue outcomes.
• 73% of the respondents feel it is important that
employees can articulate the corporate goals that their onthe-job behavior or their role at work influences.
– Fewer, however, used the corporate goals to define
individual work objectives.
© 2004 AberdeenGroup • 9
Methods and Frequency of Employee
Assessment
Cascading goals from the CEO down to all
employees
Objectives linked to corporate goals or balanced
scorecard
Once a year
Online measurement/record keeping
Multiple times a year
Multirater/360
On an ongoing basis
Self-assessment
Paper forms/interviews
0%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
© 2004 AberdeenGroup • 10
Issues Identified: Managerial Training
• Training managers to conduct performance
evaluations and the ability to tie employee
objectives to corporate goals are seen as the
biggest issues in managing employee
performance.
• Training managers how to coach employees
better was the highest rated priority (79%)
© 2004 AberdeenGroup • 11
Report Card: Room for Improvement
• 52% are locked into paper-based evaluations that are
conducted yearly and rarely reviewed again.
• 40% report that internally they are not ready to evaluate
performance beyond its demonstration at the departmental
level.
• Over a quarter felt that revisiting an employee’s progress toward
his or her goals more than once a year is unimportant.
• Almost a quarter reported insufficient awareness of the value
potential of aligned goals to merit further attention to the
matter
• 11% thought that the employee’s ability to explain his or her
job’s relationship to corporate goals was not at all important.
© 2004 AberdeenGroup • 12
Top of the Wish List
• A new electronic performance management
system (32%)
• Investment in an electronic system to better
articulate and manage employee’s individual
goals and their achievement (35%)
• 22% of companies participating have budgets in
place for new or enhanced employee evaluation
practices, procedures, or management systems
within this calendar year.
© 2004 AberdeenGroup • 13
Aberdeen Comparative Framework
The
Deans‘
List
Best
in
Class
Industry
Norm
Laggards
© 2004 AberdeenGroup • 14
What Do We Learn from Best in Class
Companies?
• Best-in-class companies consider employee
evaluation as on-going, with at least monthly
discussions between employee and manager.
• Best-in-class companies see employee evaluation
as an opportunity to foster employee growth
• Best-in-class companies are more likely to use
automation as part of their employee
management initiatives
© 2004 AberdeenGroup • 15
Frequency of Employee Evaluation By
Competitive Framework
80%
70%
60%
50%
40%
30%
20%
10%
0%
BIC
Average
Laggard
Never
Once a Multiple Ongoing
Year
Times a Basis
Year
© 2004 AberdeenGroup • 16
50%
45%
40%
35%
30%
BIC
Best
in
Class
25%
Norm
Laggard
20%
15%
10%
5%
0%
No compelling
business value
proposition has
been developed to
support this
Insufficient
Not considered a
awareness of the strategic initiative or
value potential of
a top business
aligned goals to go
priority
forward
Internally we are not
ready for evaluating
performance beyond
its demonstration at
the department level
The required
organization or
potential process
change is not
warranted by the
expected benefits
Perceived Barriers
© 2004 AberdeenGroup • 17
Comparisons Between Best in Class and Laggards: Perceived
Barriers to a Performance-Driven Organization
© 2004 AberdeenGroup • 18
Best in Class Companies Employ
Automation in EPM
A uto mated (o nline)
perfo rmance
measurement to o ls
26%
36%
38%
A uto mated perfo rmance
management reco rd
keeping
A perfo rmance
management pro gram with
cascading go als fro m the
CEO do wn to all
emplo yees
© 2004 AberdeenGroup • 19
Distinctions in Leaders and Laggards
• Over half of the Best in Class companies use
technology in managing their workforce to
enable both timeliness and consistency
• Best in Class companies exceed the others in
viewing employee evaluation as an ongoing
process rather than a once a year, one-shot deal.
© 2004 AberdeenGroup • 20
And the Laggards….
• Only laggards conducted no measurement of
their workforce whatsoever
• Laggards exceeded the industry norm in viewing
performance management as the bastion of HR
• Both laggards and the industry average far
exceeded best in class companies in using
employee evaluation solely for yearly budgeting,
tied to raises and merit increases.
© 2004 AberdeenGroup • 21
Best in Class Companies in EPM
Outperform Peers
90%
BIC
Average
Laggards
80%
70%
60%
50%
40%
30%
20%
10%
0%
Productivity
Attitude toward
Job
satisfaction
work and the
corporation
Revenue
generation
Employee
Retention
satisfaction with
company in general
© 2004 AberdeenGroup • 22
Key Take-Aways for the Less than Best:
Steps for Laggards
•
•
•
Know why you want to measure an individual’s performance.
–
If you see no reason to evaluate performance, then don’t bother.
If you do nothing whatsoever with a performance review and it
does not influence a worker’s job performance or effect
compliance, you may as well not go through the motions at all.
Proactively articulate a plan for a performance-driven culture.
–
Assuming improving the workforce is indeed a priority, enlist top
management behind a move to improve employee performance
by defining what it should be.
Begin communicating with your workforce.
–
Moving to a performance-driven environment is an exercise in
change-management. Prepare for it early; a change in how or
why an employee is to be evaluated is frightening.
© 2004 AberdeenGroup • 24
Key Take-Aways for the Less than Best:
Steps for the Average Companies
•
•
•
Put your money where your mouth is.
–
Create a culture where on-going evaluation is part of corporate life; and
managerial time is allotted to and rewarded for that endeavor.
Train managers who are responsible for performance evaluation.
–
Evaluation of performance and the follow-on coaching to improve it both
require training. In addition, managers report discomfort at discussing
performance with employees, especially that which needs improvement.
A performance-driven culture requires open discussion of individual
performance from the top down – and that requires training at all levels.
Evaluate automated performance tools.
–
Eliminate manual, paper-based processes, and consider automated
solutions that employ sharable planning worksheets, workflow, electronic
record retention, Web-based record access, e-mail, and corporate-wide
goal alignment.
© 2004 AberdeenGroup • 25
Key Take-Aways for the Best:
There is Always Room for Improvement
•
•
•
•
View performance management as a business process worthy of investment.
–
Foster a corporate culture and business processes oriented around high
performance. This takes an ongoing commitment to enterprise-wide
communication.
Create valid measures for employees’ performance.
–
Articulate distinctions between the A, B, and C players. Ensure that these are
quantifiable and that rewards based on performance distinguish between the
results of these performers. Remember that you need to retain the B players as
well as the super-stars!
Drive toward corporate goal alignment.
–
Measure performance based on proximity to achieving corporate business goals
while remaining realistic about what employees actually have within their power
to achieve and accomplish. An individual cannot be held accountable for goals
he or she is powerless to successfully impact.
Evaluating and improving workforce performance requires ongoing attention to
managerial training.
–
Increase managerial training on employee management, evaluation, coaching,
and mentoring. This is not a one-shot event; it is an ongoing business process
of managerial growth in itself.
© 2004 AberdeenGroup • 26
Aberdeen Conclusions
• It is hard to improve what you cannot measure; it is impossible
to measure outcomes if you cannot articulate not only the
outcomes desired but the degree of quality required for those
outcomes as well.
• Performance management can only be a good as the
manager’s ability to set objectives clearly, articulate goals and
their relative value, define the levels of performance expected
and explain how the employee is to achieve those levels. This
requires training and commitment.
• The success of a corporation’s workforce management
endeavors will not be determined solely by technology: this
research demonstrates that commitment of top executives to a
performance-driven enterprise and the requisite interest,
training, and dedication by middle level managers to the effort
is paramount.
© 2004 AberdeenGroup • 27
www.aberdeen.com
Clinton Wingrove,
Head Of International R&D – Performance Management
CEO and Principal Consultant,
____________
Pilat (North America) Inc.
____________
800.338.9701
www.pilat-nai.com
© 2005 Pilat (North America), Inc.
Unlocking individual and organisational potential
PERFORMANCE, TALENT and DEVELOPMENT MANAGEMENT · COMPENSATION · ORGANIZATIONAL MEASUREMENT · STAFFING
© 2004 AberdeenGroup • 30
© 2004 AberdeenGroup • 31
Pilat HR Solutions
Performance
Management
Talent
Management
Development
Management
Organizational
Surveys &
Research
• Goal Setting
• Succession Planning
• Development Planning
• Auditing & Benchmarking
• Goal Alignment
• Talent Management
• Employee Surveys
• Competencies
• Development
Management
• Development Tracking
and Review
• 360º Feedback
• Performance Review
and Appraisal
• Development
Management
• Competencies
• Resumes
• Coaching Management
• Executive Assessment
• Teambuilding
• Risk Management
• Interactive e-Learning
• Executive Assessment
• Data Analysis
• 360º Feedback
• Qualitative & Quantitative
Research
• Action Planning and
Follow Through
• Executive Coaching
• Process design, training • Process design, training
and implementation
and implementation
• Process design, training • Process design, training
and implementation
and implementation
• In-House/ASP services
• In-House/ASP services
• In-House/ASP services
Compensation - Staffing
• ASP services
© 2004 AberdeenGroup • 34
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Questions &
Answers
Webinar.Questions@Pilat-nai.com
Thank you for your participation.
February 8, 2005