Managing performance in the downturn

Managing performance in a downturn - solving the dilemma Managing performance has become even more important during the current economic context. Business leaders are being forced to drive their businesses harder; cut costs whilst at the same time reassure and motivate employees so that they get the best from the people they have in order to stay afloat. Managing performance is known to be difficult to deal with Even in more stable market conditions, executives often complain that the systems in place are too complicated, too technical and just not clear about how individual performance matches the business objectives. Furthermore, in difficult times, many organizations pursue short-term goals at the expense of working towards longer-term strategic objectives into which performance management would fall. To thrive in these turbulent times, leaders should harness the power of their enterprise DNA (E-DNA) to improve team and individual performance and deliver tangible results. E-DNA is more than just culture or ‘the way we do things around here’ E-DNA is unique to each It is the sum total of an organization’s ability to execute strategy, take care of customers, maintain organization. It is the confidence in leadership and engage employees. It underpins everything the organization does, total of an organization’s how it defines itself and what the organization is. Executives who look closely will often find that ability to execute their there is a clash between published policies and the way in which E-DNA affects key decisions about performance, reward and recognition. strategy, take care of their customers, A CEO who wants to drive the business strategy further and deliver results more quickly will take the maintain confidence in time to assess the E-DNA; understand how it impacts their ability to drive performance, and harness leadership and engage its power to support and re-enforce performance management and other people decisions. Using employees. E-DNA in this way helps executives get the most out of performance management techniques in the downturn and deliver better results. ©2009 Hay Group. All rights reserved 1

Managing performance in a downturn - solving the dilemma The way forward First, it is necessary to take a critical and realistic view of the shape your business is really in. This simple exercise helps organizations identify where they stand in four different downturn scenarios along the spectrum from survival to prosperity (illustrated below). It is particularly those organizations that fall into either scenario one or two that need to use performance management to help them survive in the current economic climate. Scenario 1 Scenario 2 Scenario 3 Scenario 4 Stop bleeding Intensive care Recovery Sustain You need to keep your You need to improve your You can, and want to, strengthen You are in good shape and organization alive and adapt organization efficiency and your competitiveness: redesign it’s time to gain unrivalled quickly to the economic situation refocus on core processes the way you operate competitiveness Limit the development of risks Learn from the crisis and develop Create a real top leadership team Develop leaders who can and liabilities throughout the effective risk management manage ambiguity Gain market position during the crisis capabilities crisis Take advantage of competitors’ Preserve the foundations of Increase capability, get rid weaknesses Become stronger, take measured the business: clients, talent, key of deadwood and raise the steps to expand your markets, Use strategic position to assets, differentiated practices performance bar customers and reach outperform the markets Survive Adapt Shape Follow these six simple rules: Our six basic rules for managing performance in a downturn offer a positive alternative to going back to basics. Organizations that adopt a strategic approach to performance management achieve sustainable results in the short and long term. Clarity of direction maintains a motivated workforce and creates a balance between employee roles and performance. n Take a careful look at what really drives your business and be honest about what this really is n Do not put at risk what made you successful - protect your E-DNA n Develop new performance management ‘capabilities’ that address short-term down turn imperatives without jeopardising long-term value creation n Speed up the performance management cycle to help manage short term risks and opportunities n Manage the emotional challenge leaders face in the downturn - be sensitive to people’s fears and try to energize your organization n Increase and improve communication – share your plans, the good and the bad news Apply the rules Hay Group offers effective, proven performance management practices. We not only design a performance management plan for the downturn, but we can also help bring it to life. For more information about how Hay Group can help, contact: http://www.haygroup.com/ww/contact/Index.aspx About Hay Group Hay Group is a global management consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organizations realize their potential. www.haygroup.com ©2009 Hay Group. All rights reserved 2

Managing performance in the downturn

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