5 Performance Management Practices of High-Performing Firms
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Download my research notes and findings: http://gettalk.at/atd Instead of just hating on performance management processes, why don't we do something about them? New insights uncovered by Lighthouse Research reveal a clear distinction between the performance management and engagement practices used at high-performing firms versus their lower-performing peers. And yes, performance in this case means business KPIs such as revenue, engagement, and retention. The top-performing companies leverage a mixture of recognition, regular conversations, and other practices to create more engaging workplace experiences for their employees, ultimately driving engagement and performance to new heights.In this webcast, we'll look at the research and what it can teach us about how to improve our approach to performance management. More practically, we'll examine some case studies and stories of companies that have modified their approach to performance management, reaping a variety of rewards. You will learn: +the deep links between engagement, performance management, and business results +how to adapt performance management practices to improve outcomes +how other firms have made the transition, including lessons learned.
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5 Performance Management Practices of High-Performing Firms
- 1. Performance Management 5 Practices of High-Performing Companies
- 3. Speaker • Internationally recognized research and thought leadership on technology, talent strategy, innovation, and more • Breaking the analyst mold: Unique blend of practitioner experience and research • Insights have helped more than 1 million practitioners around the globe • We’re Only Human podcast focuses on intersection of technology and work 3 Ben Eubanks Principal Analyst @beneubanks
- 4. About the Research • 250+ employers • 25 executive interviews • Meta-analysis of 8 other studies • Hypotheses: engagement, culture, performance management, and company performance are interrelated gettalk.at/atd
- 5. Informal Poll Which of the following is true for your organization? • Our current approach to performance management increases employee engagement. • Our current approach to performance management decreases employee engagement. 5
- 6. Engagement, Performance Linked • Low-performing companies are 58% more likely to say their approach to performance management is ineffective. • High performers 20% more likely to say their approach to performance management improves engagement.
- 7. Agenda • Research Highlights • Recognition • Manager Feedback • Peer Feedback • Development Coaching • Focus on Strengths • Connecting Performance, Engagement, and Business Results • Q&A
- 8. Defining “High-Performing” • Retention • Revenue • Employee Engagement
- 9. 5 Practices of High- Performing Companies
- 10. Recognition • 37% more likely • Zig Ziglar says… • Don’t fall for the Millennial trap • Behavior modification
- 11. Case Study: Ohio Living • Ohio-based home health and hospice care • 3k employees • 70k clients • Surprising recognition outcomes
- 12. In the Moment Manager Feedback • 29% more likely • Alan Mulally’s approach • Avoid the sandwich • Expectations + Assurance
- 13. Case Study: Stout Advisory • US-based investment banking advisory firm • 475 employees • Annual goals aren’t bad, but they need revisiting • “Stale feedback”
- 14. Peer Feedback • 26% more likely • Make it simple (not a 360-degree process with twelve steps) • Anonymity vs. confidentiality • Upward feedback
- 15. Case Study: CVS • 250k employees • Retail pharmacy • Focus on the giver, not just the receiver • Use as signal for succession
- 16. Development Coaching • 20% more likely • 90% of workers take a job outside their company • Keep it simple (5/1) • Micromanage your heart out
- 17. Case Study: Chipotle • Restaurant chain • 60k global employees • Pre-Implementation Baseline: 52% salaried store manager turnover • Post-Implementation: turnover for salaried managers dropped to 35%; dropped for hourly managers by more than half • Paid out $1+ million in people development bonuses in 2010.
- 18. Case Study: Hootsuite • Canadian technology firm • CEO/executive support from the top • It’s beyond leveling up. It’s about expanding into new skills and territory. • Stretch assignments: 90 day period, 1 day per week. Reduced job duties. Learning plans from both managers.
- 19. Focus on Strengths • 14% more likely • Albert Einstein’s other theory • Lessons from athletics • “Give the man his guitar”
- 20. Case Study: Credit Suisse • 48k workers • Swiss banking and financial services • “Internals first” • 2016: 4,400 internal employees made a move • $75+ million in hiring and training costs saved
- 21. Pro Tip: It’s About Culture Change • Change doesn’t happen overnight • Every organization’s rhythm is different (monthly, quarterly, etc.) • It’s not about the platform, technology, or process--it’s about the behaviors • Framing the change (WIIFM?) • Employees: own your own career • Managers: framework for managing people • Business leaders: all about accountability
- 22. Qualitative High-Performer Responses • Cheering on the progress, not just the end result. • employee led process • Focus on what manager can do for employee, to eliminate barriers and make work easier • Identifying potential high value employees and working to develop them by providing projects, opportunities. • Monthly and weekly one-on-one sessions with employees • Upward feedback • We focus on work-life balance goals and how we live into our value words (respect, integrity, wholeness, creativity, empowerment) LHRA.io
- 23. Other High- Performer Findings • More likely to believe technology enables greater visibility into performance trends • Less likely to say their technology is a hindrance • More likely to say that driving engagement, individual, and business performance is the goal of performance management • Less likely to say that compliance is the primary reason for performance management LHRA.io
- 24. Learning from High-Performing Companies Talent Practice Gap Analysis: High Performer are… Focus on eliminating weaknesses 25% less likely to focus on eliminating weaknesses Forced/stacked ranking 31% less likely to use stacked ranking Annual goal setting 4% less likely to prioritize annual goals More frequent goal setting (two or more sessions annually) 44% more likely to do more frequent goal setting Recognition for performance 37% more likely to use recognition to drive performance In the moment manager feedback 29% more likely to use in the moment feedback Peer feedback 26% more likely to use a peer feedback mechanism Coaching for development 20% more likely to use coaching for development purposes Focus on strengths 14% more likely to focus on employee strengths 24
- 25. “Lessons learned” from Low Performers • Low-performing companies are 58% more likely to say their approach to performance management is ineffective. • These “traditional” performance approaches may actually demotivate your BEST workers. Talent Practice Focus on eliminating weaknesses Forced/stacked ranking 25
- 26. Connecting Engagement with Business Results
- 27. Engagement as a Business Indicator • High performers 20% more likely to say their PM approach drives engagement. • The power of engagement: • Productivity • Retention • Customer satisfaction • Revenue • Key: Find your practical impact
- 28. Practical Performance Impacts of Engagement • Retail • Healthcare • Financial services
- 29. Action Items • Increase adoption of other high-performing practices • Consider the performance- engagement link: is your current approach driving or harming engagement? • Bring that discussion to the executive table to influence decisions and drive the business case for change
- 30. gettalk.at/atd Instant download of the research plus 8 other studies from our meta-analysis.
- 31. Questions? Email: ben.eubanks@LHRA.io Website: LHRA.io Twitter: @beneubanks 31 Ben Eubanks Principal Analyst
Editor's Notes
- Backward integrated design for college syllabus development BID for performance management: the goal is to track what everyone is doing so we can penalize them and reduce their variable compensation, right? Obv not! The goal is to help enable better performance. That’s why we did this study last year and why I am still excited about the findings. It’s not just about how companies are doing their reviews—it’s about what separates the great ones from the rest and the lessons we can learn from them.
- Recognition drives engagement, which drives performance, etc. For you, this means making recognition a part of your performance culture. Don’t bend over backwards or try to make it difficult. Simply weave the practice into what you’re already doing. When someone does something worthy of note, give them the attention they deserve. It rewards the behavior, making it more likely to occur again, and it also can serve as a reminder for peers about what sorts of behaviors are most valuable. Story: recognition of safe driving, best day ever on the job.
- Alan Mulally story. Focus: the employee needs to see that feedback isn’t a wrecking ball to tear them down, it’s a plan to build them up. Also, you’ve probably heard that “give them two positive comments and a negative comment in the middle.” Don’t do that. It’s basically a crap sandwich and they won’t care about the positives. Instead, be very honest and very fair in your assessment of their performance. It doesn’t do anyone a favor when you try to hide the critique under fluff. One other thing here. There was a study done to examine what drove the best improvement in performance on a group of students. For half of the students the teacher wrote comments with a sticky note that basically said “this is feedback on your work.” The other half got a note that said “I have high expectations and know you can do better.” each student was allowed to rework the assignment and turn it back in for another grade. The students with expectations+assurance did much better and were more likely to try again than those that simply got feedback. The lesson here is that we can take feedback to a deeper level by setting expectations and providing assurance (as in I know you can do better). Neat lesson for all of us, including me.
- These are the things that we decided we needed in order to have more impactful performance conversations: Goals: We’ve always had annual goals, but too often they sat in the drawer for 12 months. We wanted to find a way to get people to pull out their annual goals on a regular basis. Real-time feedback: VERY important for us. The world moves too fast for 6 month old feedback to be useful! Development focus: One thingyou can’t change is what has happened in the past. We think it is important to talk about past performance, but we also want to focus on moving forward. Public Peer Recognition: Popular in our organization. People work long days, a recognition is a great way to feel valued. Employee-driven: Important for 2 reasons 1) everyone needs different levels of feedback/individual flexibility, and 2) managers much more likely to respond to request from their own employee User-friendly: Technology can’t be difficult. People are used to smooth technology at home – they demand it at work. I like being able to give a recognition from my sofa!
- Managers can’t be everywhere and see everything, which is why there’s value in peer feedback. It doesn’t have to be a super formal twelve step process for 360 degree reviews. It can be a simple opportunity, leveraging technology or not, to let peers comment on the performance of others. We used to use a little flipchart in the office that let people comment on the work of others. If they aligned with a core value or if they helped meet a goal, that was spelled out in the little note. Then at the end of the week I pulled them down as the HR manager and put them on our CEO’s desk so he could read and comment on them really quickly. It took two or three minutes but I would walk by months later and those were still handing up in peoples’ workspaces.
- CVS example. Store managers are key in this. 250k ees. How find great store manager talent? Performance was signal prior, but it wasn't good enough. Identify individuals in population based on recognition behavior, model that behavior for other employees, find who exhibits that behavior and focus on them. Those people are your future star manager talent.
- Gallup: more than 90% of workers that took a new job did so OUTSIDE their company. Why? Because we are failing to really coach and develop our people. From a mechanical perspective: it’s simple. Set aside a few minutes for each manager one on one meeting for the employee to talk about their aspirations. Where do they want to go? What do they want to be? Let them drive it and don’t let managers cut it short. In their new book The Best Team Wins, the authors talk about how the best managers are great at micromanagement. Career development and growth often show up in studies as the number one reason people stay with an organization. Lack of development or growth, even a pereption of a lack of opportunities, can lead to turnover. I have done a lot of research on talent mobility and know that employers that make this a priority see some amazing results. Common questions: how do I develop someone if they’re at the top of a pay scale? How do I develop them if we have no budget? A great way is with crosstraining.
- “give the man his guitar?” Weaknesses comment
- Take 5+ minutes to explore this page. Talk about each practice individually.
- The historical approach to performance is more punitive, or punishing, in its focus. We saw the high-performing approaches were very different. With regard to eliminating weaknesses, consider this quote: Everybody is a Genius. But If You Judge a Fish by Its Ability to Climb a Tree, It Will Live Its Whole Life Believing that It is Stupid. In other words, why do we think focusing on a weakness or shortcoming is going to make someone great? Or, in the context of engagement, why will focusing on a weakness make them more likely to work harder and perform better?
- The link we were trying to show in the study, and it clearly appeared, was that high-performing companies have better performance practices that lead to higher engagement. The key is to find the practical impact at your organization. And that impact goes beyond that individual behavior. The data show an amazing number of correlations. For instance, safety, performance, effort, retention, customer satisfaction, quality, revenue, profit, and others. For a pro tip. If you’re doing engagement surveys, examine your levels and try to correlate them with some of your business data. Is engagement correlated with revenue, customer satisfaction, or another key metric? If so, what is the connection? Once you have that in place, your executive team will be coming to you because engagement can be a leading indicator for other business impacts.
- But what’s the point of measuring engagement? Engagement is more than just a number or a survey. It’s a behavior. If you’re in retail, an engaged worker might smile at the customer and chat with them about their day. In healthcare, it’s the nurse that double checks the medication or the procedure before carrying it out. In manufacturing, it’s the worker that sweeps up the mess on the shop floor before it becomes a hazard.