NEW PM PROCESSES CREATE A HIGH- PERFORMANCE CULTURE

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1 RESEARCH RESULTS CLIENT RESEARCH RESULTS BY: MICHAEL KEMP CONSULTANT, CABER REALIZATION RESULTS: More than 7 out of 10 Avnet employees agree that the new performance management process is successful in all 10 areas of effectiveness. More than 90 percent of employees state that their personal goals are aligned with Avnet s goals, they understand how their roles fit into the overall organization, and they know what it takes to be successful in their jobs. Employees find the new performance management process to be more useful than the previous in terms of prioritizing work, providing focus, tracking personal goals, creating a sense of accountability for achieving work-related goals, and instilling a sense of accomplishment. NEW PM PROCESSES CREATE A HIGH- PERFORMANCE CULTURE INDUSTRY Electronics Distribution LOCATION(S) United States DDI PRODUCT USED Maximizing Performance BUSINESS NEED Avnet, Inc., is one of the world s largest distributors of electronic components, including connectors and semiconductors, technology solutions, computer products, and embedded technology. In 2010 Fortune ranked Avnet at #142 on the Fortune 500 list and as the #1 Most Admired Company in its industry. With a broad base of more than 100,000 customers in more than 70 countries, Avnet connects the world s leading technology manufacturers. To ensure the organization s continued success and to uphold its commitment to delivering the highest value to its customers and suppliers, Avnet identified the need to effectively and consistently manage employee performance across its 300-plus locations. The company needed a straightforward performance management process that could clarify its expectations for employees and provide individual accountability for high performance while also increasing consistency and objectivity in performance assessment. SOLUTION Avnet sought out a reliable partner for implementing an effective performance management (PM) process companywide. Development Dimensions International (DDI) worked with the organization to design and create a new process that would involve employees more in managing their performance and provide a clear link between individual performance and organizational goals and values. Also, the new PM process would, by design, generate a high-performing environment at Avnet by ensuring individual responsibility for performance and increasing communication around performance management. Its employees would be fully involved in creating, managing, and tracking their performance objectives while their managers would ensure accountability through open and timely communication. RESEARCH DESIGN Before implementing the new PM process, Avnet wanted to establish a baseline for tracking how employees perceived its established process and to identify areas for improvement. In 2009 a survey was distributed to employees, and more than 1,500 of them responded to questions in areas such as goal alignment, role clarity, feedback, and the value of performance reviews.

2 To monitor the impact of the new performance management process that was implemented at Avnet, a follow-up survey was conducted approximately six months later, in A total of 788 respondents answered similar questions. The changes in responses between the two surveys were then compared. In 2009, roughly half of the survey respondents worked in the Electronics Marketing group, a quarter worked in Technology Solutions, 8 percent in Finance, 5 percent in Global Information Systems (GIS), and 4 percent in Logistics. The 2010 survey closely mirrored this trend, providing support for making meaningful comparisons across the two survey groups Sample 2010 Sample RESULTS Characteristics of the New PM Process More than 7 out of 10 Avnet employees agree that the new performance management process is successful in all 10 areas of effectiveness. After the new PM process was implemented, the majority of survey respondents (more than 70 percent) indicated that they agreed or strongly agreed the new process was effective in the 10 areas assessed. These included goal feedback, focus on development, shared ownership and responsibility, participatory goal setting, completeness of the appraisal, role clarity, goal alignment, value of the appraisal, coaching, and fairness and accuracy of the performance appraisal (see Figure 1). 2

3 Figure 1: Participants Evaluation of the Effectiveness of the Performance Management Program (2010 survey) Feedback Focus on Development Shared Ownership and Responsibility Participatory Goal Setting Completeness of the Appraisal Role Clarity Goal Alignment Value of the Appraisal Coaching Fair and Accurate Appraisals Percent Rating the System as Effective The performance management process consists of three critical phases: planning, performing, and reviewing. A review of the characteristics of Avnet s PM process in these areas follows, along with a comparison between the 2009 and 2010 survey results. Planning Phase With over 40 years of research and experience, DDI has found that employees who see how their individual performance contributes to organizational success and goal achievement are more likely to feel engaged and motivated to perform. An impressive 93 percent of Avnet respondents agreed that their personal goals are aligned with the organization s goals. Furthermore, 26 percent of them stated that they have seen an increase in the degree of goal alignment at Avnet since the new PM process was introduced. Most of the respondents (80 percent) agreed that the new process involves participatory goal setting. Specifically, 84 percent reported that goal planning with their manager has resulted in creation of explicit goals and a clear plan of action. Participatory goal setting was also the area with the greatest amount of observed improvement from 2009 to 2010, with 38 percent of respondents reporting an increase in the activity since the new process began. Additionally, through the new process, employees at Avnet understand what is important for success in their roles. A remarkable 91 percent reported having role clarity, showing that they possess the knowledge to perform their jobs well, know exactly what they should and should not be doing, and understand why their job exists within the organization. Moreover, since the new PM process was introduced, 33 percent of the survey participants have seen an increase in the degree of role clarity at Avnet. The openended comments from the 2010 survey support this finding, with roughly 15 percent of respondents referencing improved clarity, quality, or alignment of goals. From top to bottom, all participants are working to a more aligned goal. an Avnet employee 3

4 Performing Phase More than 8 out of every 10 Avnet employees agree that they are focused on development. Out of all 10 areas surveyed, respondents reported the greatest improvement (from 2009 to 2010) in this one, as their managers have taken a more active role in employee performance and development. In fact, 27 percent of survey respondents reported increases in their efforts to focus on development. In terms of shared ownership and responsibility of performance management among employees and their managers, 88 percent of respondents agreed that their manager helped them to identify specific responsibilities pertaining to performance management, while 21 percent reported an increase in the degree of shared ownership and responsibility with their manager (regarding managing employee performance). Concerning coaching and feedback, 84 percent of respondents indicated that they receive feedback from their manager at times other than when a mistake has been made and that this discussion is very specific and valuable. Also, more than a quarter of respondents reported an increase in how often they received both feedback and coaching from their manager. These results echo the open-ended survey comments provided by respondents, 26 percent of which referred to improvements in the frequency and/or quality of communication with their manager regarding performance. I love the more frequent and open communications between me and my direct supervisor. an Avnet employee Reviewing Phase Regarding their performance appraisals, 86 percent of survey respondents agreed that the new method allowed a complete representation of their work life (balances performance with development, strengths with weaknesses, etc.) and that it is fair and accurate. Nearly three-quarters (73 percent) value their performance appraisal. Additionally, more than 20 percent noticed an increase in the comprehensiveness, fairness, and accuracy of the appraisal, while 18 percent reported an increase in the value of the appraisal compared to the previous process. Utility of the New PM Process Avnet employees find the new PM process more useful in terms of prioritizing work, providing focus, tracking personal goals, creating a sense of accountability for achieving work-related goals, and instilling a sense of accomplishment. Employees were asked to rate on a five-point scale (1 = not at all, 2 = small extent, 3 = moderate extent, 4 = large extent, 5 = very large extent) how useful their performance management plan is in five specific areas, which are shown in Figure 2. More respondents selected ratings of 4 and 5 in 2010 than did in Figure 2 shows the greatest improvements involved setting work priorities (+4.0%), providing a sense of accomplishment (3.7%), and monitoring progress toward goals (+ 3.4%). 4

5 Figure 2: Utility of the Performance Management Plan Percent who selected To a large extent or To a very large extent % Difference 2009 to 2010 Setting priorities for your work Giving you focus in your work Monitoring your progress toward goals % + 2.0% + 3.4% Creating a sense of accountability for achieving your goals % Making you feel a sense of accomplishment or progress Survey 2010 Survey + 3.7% These results indicate that the implementation of the new PM process has realized positive results especially around role clarity and increased manager involvement in performance management. The majority of employees who responded to the survey agreed that the new PM process has had very positive effects on the planning, performing, and reviewing stages of performance management. Increasing the Impact of the Current Performance Management Process As with any new organizational process or system, there is always room for improvement. That employees report the new PM process at Avnet as more useful than the previous one is encouraging, especially since it has been in place for less than a year. However, the majority of employees (62 percent) feel that this performance management plan is, at most, only moderately useful across the areas outlined in Figure 2. Furthermore, roughly 6 out of 10 believe that Avnet s process for managing performance would actually not help them work more productively. Those who perceive the process as being not very useful will be less likely to appreciate its value and to fully participate in it. Indeed, of all the areas in which employees reported positive increases in the process characteristics, they rated the value of the appraisal the lowest (only 18 percent reported improvements). As employees continue to use the new PM process and actually experience increases in their development and performance due to improved processes, planning, and accountabilities, their general perceptions of utility also will increase and, in turn, so will their participation and commitment. By taking steps to emphasize and promote the utility and value of the new PM process, Avnet will help its employees appreciate it and increase their motivation to improve their individual performance. Avnet employees have a clear understanding of their roles within the organization and what it takes to be successful in them. This new process is meant to facilitate improvements in their individual performance. It not only will have a positive impact on Avnet s bottom line, but also provide its employees with a sense of accomplishment, which will serve to maintain and increase their engagement. 5

6 CONTACT INFORMATION WORLD HEADQUARTERS This document was developed by DDI s Center for Applied Behavioral Research (CABER). For more information, contact CABER@ddiworld.com. For employees to begin believing that the performance management process is valuable, they need to continuously hear about its importance from the organization. This will help them begin to recognize how the process can act as a record of what they have accomplished as well as a reminder of what they still need to do to achieve their remaining, even higher, goals. Although it might take some time for everyone to recognize the longterm value of performance management, the organization s clear and strategic communication around the purpose of the new process will eventually show employees that their efforts are indeed worthwhile and important for the organization s success. Avnet may want to continue to monitor its employees perceptions of the utility and value of the process over the next year to ensure that its impact continues to mature. To continue improving employee perceptions, the organization s communication effort should start with its managers. Managers have the responsibility for modeling and maintaining the importance of the PM process. At Avnet 86 percent of the survey respondents agreed that their current performance appraisals were fair and accurate. That number was higher in 2009 (90 percent) when the former PM process was still in place. Ensuring that managers are modeling the importance of the PM process and using it effectively will go a long way toward facilitating an improvement in employee perceptions of its value and utility. CONCLUSIONS The results of this evaluation show the value and impact that the new PM process has had on Avnet. In particular, respondents believe it has been especially effective at helping them prioritize their work and monitor progress toward their goals and also at providing them with a sense of accomplishment. They clearly understand how their roles fit into the organizational strategy and what it takes to be successful in those roles. Additionally, they find the new process to be more useful than the previous process in terms of prioritizing work, providing focus, tracking personal goals, creating a sense of accountability for achieving work-related goals, and providing a sense of accomplishment. Within the first year of implementing the new PM process, Avnet is clearly well on its way toward continued excellence, equipped with a more aligned and communicative workforce. In this short time, its employees have noticed real improvements, proving that Avnet now has a performance management method that is capable of not only meeting but also exceeding individual and organizational ambitions. However, performance management is not a self-sustaining process. Factors such as organizational culture, supervisor support, and proper training can either facilitate or inhibit the integration of solid performance management practices in an organization. To ensure that Avnet continues to reap the benefits of effectively managing its employees performance, the organization needs to stress the importance and the value of the process, which will then facilitate its employees motivation to manage and improve their individual performance. 6 MKTMPRR