What Do the Best Performance Management Processes Have in Common?

Transcription

1 SAP White Paper Performance Management What Do the Best Performance Management Processes Have in Common?

2 Table of Contents 4 Best Practices in Performance Management to Drive Better Business Results 7 Customer Stories We would like to thank TranSystems and Micron Technology, Inc. for sharing their stories. 2 / 8

3 Research has demonstrated a clear link between well-designed performance management systems and organizational success. Yet, there is considerable debate about the best approach to performance management and, in particular, the use of ratings. The best way to identify what constitutes a well-designed process is to study companies that have highly effective performance management practices. 3 / 8

4 Best Practices in Performance Management to Drive Better Business Results In 2015, SuccessFactors sought to do this by creating a series of performance management knowledge sharing events where companies competed to show who had the best performance management process. Thirteen companies participated in four regional performance management competitions. Each contestant had fifteen minutes to showcase how their company s performance management process added value for their organization and created positive business outcomes. Audience members, consisting of more than 300 HR professionals from nearly 200 companies, voted for the winners, who then went on to compete for the North American national championship title at SuccessConnect, an annual conference for customers of SAP SuccessFactors solutions. These competitions were fun, engaging, and enlightening, providing insight into unique practices that drive differentiated performance management. What was particularly noteworthy was the variety of performance management methods used, making it clear that there is no one size fits all approach to performance management. The best performance management systems are those tailored to an organization based on its culture, size, nature of business, unique workforce characteristics, and specific needs, resources, and constraints. However, even with the companies using a variety of approaches, several consistent themes emerged. By bringing companies together to talk about what effective performance management processes look like, we were able to learn what companies can create as part of a modern approach to performance management rather than focusing on what to eliminate. 4 / 8

5 First, ongoing employee manager conversations that include feedback and coaching are essential. Successful companies provide leaders with performance management training and resources, and hold them accountable for having continuous dialogue with their employees on a regular basis. Employees are also expected to actively participate in the process by setting and tracking goals, initiating one-on-ones, and preparing for review discussions. Routine discussions about expectations, performance, developmental goals, and career opportunities occurring throughout the year result in the annual performance assessment being a nonevent. Continuous conversations help to create a meaningful and supportive learning environment that allow employees to gain the timely recognition and coaching they need. Second, although approaches to ratings often vary, as they did among the competing companies, organizations continue to differentiate the performance of employees. Systematic evaluation is necessary for organizations to ensure employment decisions are fair and that desired outcomes are achieved in an efficient manner. In some of the presented cases performance processes include annual ratings, while in other cases ratings are collected more frequently. The question is not whether companies are going to evaluate employees because they are. The question is whether employees understand how they are being evaluated, and whether they believe the process is fair and accurate. What each of the participating companies emphasized is that methods for measuring performance should be transparent, meaningful to employees, aligned with important organizational criteria, and consistent. These factors are considered critical for engaging employees, measuring performance, and making performance-related decisions about pay, promotion, and development. Many performance management strategies do not position companies to maximize positive business outcomes and drive organizational success. Organizations need to identify how to leverage performance management systems in a way that increases employee engagement and improves decision making related to workforce investment. This requires that organizations adopt flexible performance management systems that can be tailored to their specific characteristics and needs. It also means having the ability to facilitate ongoing employee-manager performance dialogue, continuous coaching and feedback, and meaningful methods for measuring performance that are also transparent and consistent. By bringing companies together to talk about what effective performance management processes look like, we were able to learn what companies can create as part of a modern approach to performance management rather than focusing on what to eliminate. After all, ultimately success comes from what you build, not what you destroy. 5 / 8

6 The next phase of performance management technology is exciting in that it will provide enhanced support for the innovative strategies already being practiced, and will enable customers to maximize the benefits of their performance management processes. For more information about SAP SuccessFactors Performance and Goals solution and our Continuous Performance Management capabilities, please visit successfactors.com/en_us/lp/buildcontinuous-performance-management.html. Customers of SAP SuccessFactors solutions can access a sample of Performance Management, Cloud Recruiting, and Learning Management System Throwdown presentations by searching on the Customer Community. 6 / 8

7 Customer Stories TRANSYSTEMS TranSystems recognizes that its success is built on the expertise of its staff. With this perspective, playing to their strengths means focusing on developing employees to their fullest potential and growing them into future leaders. Its performance management system is designed to provide fair and accurate reviews, improve performance, target resource allocation, provide talent visibility, improve leadership, and increase retention with the aim of creating a thriving company comprised of successful, long-term employees. Managers formally meet with their employees twice per year, in addition to providing ongoing regular feedback. Discussions include developing an action plan, establishing learning goals, and identifying what influences the employee s decisions about building a long-term career at TranSystems. The discussions also include what the manager can do to impact that decision and to make the work experience better. These conversations prepare managers for the annual talent review and calibration process, which includes 29 sessions, involving 280 managers, reviewing a talent base of close to 900 employees. Clear ground rules and defined scales guide these calibration sessions, during which employees are reviewed and rated according to overall performance and leadership potential. Managers value these sessions for the opportunity to formally discuss talent and strategic planning. Additionally, the developmental nature of the sessions enables managers to hone their skills through collaboration with others. Employees are motivated by knowing their performance will be showcased in front of the organization s leaders, and gain comfort in knowing scores are calibrated to ensure they are rated on the same scale as others. These sessions result in reliable reviews, valid talent pools, critical retention, and development strategies that are used for merit, bonus, and many other TranSystems efforts aimed at becoming an employer of choice. TranSystems performance management strategy enables it to develop and retain high achieving talent, as evidenced by consistently improved employee satisfaction and engagement annually since / 8

8 MICRON TECHNOLOGY, INC. Micron believes a strong foundation is critical for building a winning, high performing culture and is essential for enabling Micron to stay ahead in an intensively competitive, constantly evolving industry. Its performance management system empowers employees to perform at their best and is used to differentiate performance and reward high performers. There are three key components to Micron s performance management approach: First, it is vital that performance management is an ongoing process multiple conversations are held throughout the year, not just annually. Second, team members and leaders both play an important role in owning the process, including preparing for and engaging in performance management discussions. Third, resources and support are available to enable success; written guides provide an overview of the full performance management process along with component guides to instruct about why each step is important, what to do, and how best to complete that step. Micron uses four levels of goal plans. The corporate and department incentive goal plans tie directly to Micron s business strategy, while performance goal plans drive individual performance and development goal plans enable employee growth. Different methods for assigning goals are available to enable efficient goal assignments, to create alignment in company strategies, to establish common language for communicating expectations, and to provide the ability to assign specific projects and goals to individuals. Employee feedback indicates Micron employees and managers value the performance management process because of its effectiveness for career development, reporting and tracking, transparency, and ease of use. One employee noted, for example, that Performance management is easy with a system to review goal and achievement status, as well as ease of tracking development improvement. Team members know exactly where they stand in performance and there are no surprises at review time. Another noted they find it Really engaging to see that my hard work is recognized! vq316 8 / 8

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