Aryaduta Hotel-Jakarta, 14 August 2014 By Yunus Triyonggo
Why Traditional
Performance Management
Can't Deliver Peak Performance
Daniel D. Elash, Ph.D. (2009)
What is Traditional Performance
Management ?
Source : David D. Dubois & William J. Rothwell, 2004
Traditionally, performance management systems
concentrate on performance planning and
evaluation, rewards and discipline, according to the
Reason #1
•
They are too slow
.
–
To be truly educational, feedback has to occur at
the speed of business circumstances.
–
It is most powerful when it follows directly on the
heels
of performance.
Reason #2
They are too remote
–
Too often the voices of customers,
teammates and co-workers are
filtered
and delivered through the manager.
–
Managers can't effectively explain or clarify issues
and situations with which they aren't familiar
.
Reason #3
They are too vague (samar-samar)
– Useful feedback is specific, focused,
actionable, and relevant to a particular situation or set of circumstances.
– This requires a level of explicitness that is seldom reached
with current performance management systems, which rely on annual, or bi-annual performance reviews.
– Evaluated dimensions are often broad behavioral
categories such as "responsible," "reliable" and
"industrious." Such terms open the door for heated
Reason #4
They are too emotionally laden (sarat)
–
The mind
is best prepared to grasp new
information, think effectively and learn when it is
clear and focused.
–
Understanding, thinking and learning are more
complicated when a person is anxious,
Reason #5
They are too focused on each individual alone
– Optimizing your own performance without regard to your
impact on others, or the synergies required for effective
teamwork, is insufficient today.
– A successful company isn't a collection of individuals
performing independently; it is a networked, interdependent
system that operates as an organic whole.
– Feedback has to relate to individuals, but within the context
Challenges
However, according to a study by The Boston Consulting Group (BCG), business complexity has increased between 50 percent and 350 percent over the last 15 years.
Teams that focus on performance management have been shown to generate as much as 30 percent more revenue per full-time employee than average teams
Only 29 percent of companies create individual goals aligned to the organization
29% 71%
Company
Aligns Not Align
A full 52 percent of midlevel managers and 74 percent of lower-level employees perceive the linkage between individual goals and corporate goals as very weak
0% 50% 100%
Mid level Lower Level
52% 74%
48% 26%
Employees perceive the linkage between individual goals and corporate
goals
Strong
Weak
Up to 50 percent of employee time is spent working toward nonstrategicobjectives
50% 50%
Working spend
Strategic Non strategic
What is a Competency?
Observable abilities, skills, knowledge, motivations or
traits defined in terms of the behaviors needed for
successful job performance.
Source : Human Resource Systems Group, 2012
What is Competency-based Management?
An HR management approach that
standardizes and
integrates all HR activities based on competencies
that support organizational goals.
Source : Human Resource Systems Group, 2012
Basic
Why competencies?
Competencies translate the strategic visions and goals for
the organization into behaviors
or actions employees must
display for the organization to
(Source : Spencer, 2001)
63%
19%
12.5%
63% reduction in turnover due to increased employee satisfaction – due to greater clarity
about performance expectations
12.5% increase in sales and profits due to Competency-based training programs
19% improvement in employee performance
The Benefits of
The Benefits of better Employee competency
Improved leadership capacity
– Companies with highest rated leadership development
programs, compared to those with weak programs experienced:
•
600%
increase in overall business impact•
640%
improvement in their leadership bench strength•
480%
improvement in leader engagement and retentionSuperior Talent Management = Significant Advantages
– 26% higher revenue per employee
– 28% less likely to have downsized during 2008-2009
– 40% lower turnover among high performers
– 17% lower overall voluntary turnover
– 87% greater ability to “hire the best people”
– 92% greater ability to “respond to changing economic
conditions”
– 144% greater ability to “plan for
future workforce needs”
– 156% greater ability to “develop
great leaders”
The Benefits of better Employee competency
Competency-based Performance Management
• Competencies define the behaviors necessary for goal achievement
• They facilitate a developmental approach to performance management
How to integrate Competencies in the
Performance Management Process
Option #1 Option #2
By defining the competencies needed to perform each Performance Goal / Objective
The manager and employee identify the key competencies required to achieve each performance goal / objective (typically 1 to 3 competencies
per goal / objective)
At the end of the performance cycle, the
employee’s performance is
evaluated in relation to
the performance goals / objectives as well as the
key competencies
associated with each goal.
the competencies being assessed are entirely consistent with the
employee’s performance goals for
the performance review cycle.
Not all competencies within the competency profile for the
employee’s role / job will
necessarily be assessed within the cycle
By integrating the competencies for the
employee’s job into the PM process
The performance plan includes theperformance goals / objectives for the review period as well as the complete set of competencies from the
competency profile for the employee’s role / job
The performance goals / objectives address
“what” must be accomplished during the review period, and the competencies measure “how” the employee conducted him/herself to
accomplish their work
All competencies defined in the competency profile for
the employee’s role / job are
evaluated
Integrated Performance Management System
Annual Base Salary Short Term Bonus Long Term Incentive
Multiple years of Performance creates basis for judgement of Sustained Performance
Level High, Medium, Low
List of Competencies (example)
LEADERSHIP COMPETENCIES : 1. SHAPE THE FUTURE
2. REAL ACCOUNTABILITY 3. BUSINESS ACUMEN
CORE COMPETENCIES : 1. INTEGRITY
2. TEAMWORK 3. INNOVATION
4. ACHIEVEMENT ORIENTATION 5. CUSTOMER FOCUS
TECHNICAL COMPETENCIES : 1. FEED PROCESSING
2. FEED FORMULA
3. FEED WAREHOUSING
4. PROFIT & LOSS FEED BUSINESS 5. SERVICE LEVEL TO CUSTOMER
Suggested Action Plans
Inconsistent in meeting agreed individual business targets
consistently exceeding agreed individual business targets
•Recognise and reward
•Provide feedback
•Mentor/coach to improve Leadership
•Acknowledge contribution
Recognise and reward
•Challenge/stretch
•Expose
•Coach
•Set clear Milestones
•Provide feedback
•Coach Monitor/track
•Decision to continue or end employment
•Reward
•Milestones
• Provide feedback
•Training
•Coach to improve delivery
•Specific goals & objectives
Consistently exceeding expectations Inconsistent in
meeting
expectations Potential
Capacity
Competencies & living values
Potential discussion
Skills Experiences
Performance
PT
26 11/13/2017
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