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Emerging Trends in Performance Management: Diagnose, Discern & Develop - Part 1

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In this session, Jeremy Spake, Principal Consultant, Advisory Services for Cornerstone OnDemand, will explore several emerging trends through examining case studies of companies using these new performance management concepts. Discussing specific actions, Mr. Spake steps us through how to diagnose your current performance strategy, the benefits the latest trends have on employee engagement as it pertains to performance management, as well as discerning between learning activities and development achievement.

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Emerging Trends in Performance Management: Diagnose, Discern & Develop - Part 1

  1. 1. Jeremy Spake, Principal Emerging Trends in Performance Management: Diagnose, Discern and Develop
  2. 2. Today’s Speaker Jeremy Spake, CCP, GRP Principal, Performance and Compensation Jeremy is responsible for providing thought leadership for SaaS-based talent management by working with clients to achieve business objectives through use of the Cornerstone OnDemand (CSOD) suite of services.
  3. 3. • Annual Event • Inconsistent • Compliance • Silo-ed • Emphasis on Appraisal Emerging Trends 3 Traditional • Ongoing • Automated • People-centric • Unified Talent Management • Emphasis on Development Emerging
  4. 4. Companies Eliminating Ratings and/or Reviews 4
  5. 5. •How many companies have adopted or are considering adopting a ratingless performance management process? • A) Fully adopted a ratingless review process • B) In the process of adopting a ratingless review process • C) Considering a ratingless review process • D) Not considering • E) Other Polling Question #1 5
  6. 6. •Only 22% of organizations are considering giving up ratings – less than that have actually done it •Most of these organizations are high-tech or professional services companies •Early adopters are wrestling with the implications on compensation •Since most organizations are rolling this out over time, employee engagement / satisfaction numbers are evolving as well What We Know 6
  7. 7. • Annual • Compliance-centric • Looking at the past (rear-view mirror) • Manager view input • Based on job description • Ratings based on others • Based on singular effort Performance Review Process – A Misalignment 7 Talent • Measures • Goals – Numbers • Objectives – Statements • Quarterly review • Looking at the past and providing guidance for future (windshield) • Multi-level input • Based on leadership strategy • Based on company effort Organization
  8. 8. •How often do you have formalized performance review conversations between managers and employees? • A) Annually • B) Bi-annually • C) Quarterly • D) More frequently than quarterly • E) Other Polling Question #2 8
  9. 9. So, how can we assess our performance management process? 9
  10. 10. Elements of Effective Performance Management Performance Management Diagnose, Discern, Develop Learning Strategies Career Development Compensation Considerations
  11. 11. •Rate your organizations performance management system: • (1) (6) • (2) (7) • (3) (8) • (4) (9) • (5) (10) Polling Question #3 11
  12. 12. •Are the stated objectives of the appraisal program being met? •Are employees and managers satisfied with the equity, utility, accuracy, etc., of the program? •Do the benefits of the program outweigh the costs? •Has there been an improvement in employee, unit, or organizational performance? Diagnose 12
  13. 13. • Annual Review • 3 Points • Review accomplishments • Review contributors • Get feedback • 80,000 manager hours (40 FTEs) • Voluntary attrition spike after every review cycle • Misaligned to their new business model Case Study: Adobe 13 Before (Summer of 2012) • ‘Check in’ process, at least once a quarter • 3 points • Expectations • Feedback • Growth and Development • Connection to the company goals • Savings of 100,000 managers hours (80,000 plus another 20,000) After (Fall 2012)
  14. 14. •Has the attitude or the behavior of employees and/or managers changed as desired? •Are there signs of different treatment in the results of performance appraisal processes? •Has there been an improvement in the efficiency of the effectiveness of related human resources programs? Discern 14
  15. 15. • Annual review • No feedback • Forced ranking • Bottom 5% automatically “Needs Improvement” • Look backward only • “Appraisal” Case Study: Juniper Networks 15 Before (Fall of 2011) • 95% have their twice-annual Conversion Day discussion • 90% believe Juniper and their manager create a fair and ethical workplace • 88% report conversations were “helpful” to “very helpful” • 87% colleagues willing to give the extra discretionary effort • 79% believe they can do their best work at Juniper After (Fall 2011)
  16. 16. •Manage like a coach •Let the employee take the lead •Focus on strengths •Look ahead Develop 16
  17. 17. • Stack ranking moved people to compete with each other not collaborate • Reputation of slow response and lack of innovation • Everyone knew that only 2 people would get a good review Case Study: Microsoft 17 Before (2013) • Moved from reviews to “connect” • Future view in discussions • “No curve, No rating” After (2013)
  18. 18. Merit Increases • Merit increases are based primarily on the institution’s budget, not employee performance • When merit is frozen, typically frozen across-the- board • Market-based merit budgets are developed, differentiation based on budgetary constraints coupled with performance – often resulting in forced rankings Compensation Considerations 18 Merit Increases Do Not Reward Merit Variable Pay • Variable pay is the primary tool used to differentiate pay for performance • Often targets are set based on job/grade level and sector-driven • Performance ratings typically drive differentiation in variable payouts Variable Pay is Merit Pay Potential Solutions • Eliminate merit increases • Provide sector-based merit increases, i.e. 3% across the entire institution based on achievement of institution goals Potential Solutions • Develop compensation ratings based on employee compa-ratio and achievement of goals • Compensation ratings drive payouts • Allow for payouts at manager discretion annually or quarterly • Payouts based on regular check-ins to review goal attainment and are aligned based on quarterly objectives, goals and deliverables
  19. 19. •How many believe annual merit increases deliver the pay-for- performance narrative to employees? • A) Strongly Agree • B) Agree • C) Disagree • D) Strongly Disagree • E) It Depends Polling Question #4 19
  20. 20. Merit Allocation Example 20
  21. 21. •Engage business leaders •Communicate constantly •Ongoing feedback •Equip employees and manages for success •Consider regional differences Best Practices 21
  22. 22. •There is a misalignment between how we lead people and lead the organization •Performance reviews reflect a ‘yesteryear’ view of business today •There is a trend to adjust, but still in its infancy •Compensation must reflect these adjustments for it to be effective Summary 22
  23. 23. • Part II: Learning Strategies • Feb. 16 • Part III: Development • March 15 Elements of Effective Performance Management 23 Performance Management Learning Strategies Diagnose, Discern Develop Development
  24. 24. Questions?
  25. 25. Jeremy Spake (CCP, GRP) Principal, Cornerstone OnDemand M: 404-386-4784 Email: jspake@csod.com LinkedIn: www.linkedin.com/in/jeremyspake Contact 25
  26. 26. Thank You!

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