24 September 2015
Mary Connaughton, Director, CIPD Ireland; Eimear Couse, EMEA Senior HRBP, Dell; Jarlath Dooley, HR & Integration Director, Version 1; Joyce Farrell, People & Transformation, ESB Innovation
Many organisations are reviewing their performance management systems, conscious of the advantage of decoupling the traditional ratings system from pay and reward. This allows the performance conversation to concentrate on the employee’s capability and career development, and how this dovetails with the organisation’s business goals.
A recurring theme from participants at the CIPD Ireland’s first autumn seminar in the Clayton Hotel in Dublin, Debating Performance Management – HR Taking the Lead, was the need for HR to provide managers with the necessary skills and tools to embrace the new approach.
The seminar suggested that a dividend to this shift is that it allows HR to concentrate on a more strategic approach and be more allied to enabling the business goals of the organisation.
Expert speakers included Eimear Couse, EMEA Senior HRBP with Dell, Jarlath Dooley, HR and Integration Director with Version 1, and Joyce Farrell, People and Transformation with ESB Innovation.
Mary Connaughton, Director, CIPD Ireland
Introducing the speakers, Director of CIPD Ireland, Mary Connaughton, said that the main purpose of performance management should be to improve performance but has too often become a tool that distracts managers.
It often appears bureaucratic and gets in the way of real engagement conversations, added Connaughton. But for CIPD members it’s about trying to create a high performance culture and manage the fair distribution of pay and reward, so we have to think about what alternatives there are. But there is no easy solution, said the CIPD Ireland director.
Dr Phillip Matthews, President, National College of Ireland; Michael Owens, Honorary Chairman CIPD Ireland, HR Director Vhi Healthcare
Separating Performance Management and Pay Planning - Dell
Eimear Couse, EMEA Senior HRBP with Dell, told the seminar that Dell has built its business by putting the customer at the centre of everything it does. There is a strong culture of performance and meritocracy. Dell also recognises the relationship between happy customers and happy employees. Dell’s People Strategy is interconnected with the Business Strategy. Dell’s purpose is to deliver the technology that enables people everywhere to grow and thrive to reach their full potential. Couse stated 'we apply our purpose of grow and thrive, enabling people to reach their full potential to both our customers and our team members'.
Dell currently has global headcount of approximately 100,000 with 2,500 in Ireland in sites based in Dublin, Limerick and Cork. Over the past number of years as its People Strategy has developed so too has the approach to performance management.
When Couse started in Dell nine years ago, the organisation had a generic style performance management system, with performance reviews at mid and end year to identify the top 20%, mid 70% and bottom 10% of performers, and loosely linked with the organisation’s pay planning.
But when you had these conversations, said Couse, employees were only interested in what rating they were going to get and the related implication on reward.
As Dell grew, and acquired companies with different cultures, it brought in a more structured five point rating system with a distribution curve interlinked with pay planning. However over time it became clear that we were not really getting the return on investment for the thousands of hours that went into this process, with neither managers nor team members feeling it was a highly accurate, inspiring or engaging process.
Dell went private in 2013 and, as part of the evolving People Strategy, reviewed the performance management system which included removing a single annual review and ratings.
'Our performance reviews are now done at a separate time to pay planning. We have what we call quarterly check-ins which centre on performance during the quarter as well as looking forward to expectations and what the business is going to do for the next quarter. Much of the conversation is about career development. We also look at our leaders’ performance, leading into our People Strategy', she said.
Rewards are still strongly linked to performance and we encourage leaders to get 360 input on team members, and then make the right choices on pay decisions taking this holistic view into account. One of the things leaders are asked to weight strongly is the level of collaboration and team work as this is essential to achieving great outcomes for customers. Couse acknowledged that some managers had to be re-skilled to improve the conversations and collaboration.
'We had to get the managers away from seeing a meritocracy as only about monitoring reward at the end of the year. We started developing different programmes and our talent strategy to ensure leaders are managing low performance throughout the year and rewarding our high performers on an ongoing basis with growth opportunities, recognition and rewards.
'This was a big change for HR because it can be more straightforward to manage when you have a rating system. Without it requires a lot more engagement with managers and a better understanding of the business', said Couse.
Ultimately it has led to HR being more strategic and integrated with the business, and encourage us to coach and empower leaders to manage their talent on a year round basis. 'We are now much more of a business partner than a HR partner', said Couse.
'Tugs and Shoves' - Version 1
Jarlath Dooley, HR and Integration Director with Version 1, a market leader in IT services in the UK and Ireland, told the audience that the organisation’s shift from an annual paper based system to an automated software system served to highlight where the problems lay with their performance management process.
They found that the focus was on the process and not on organisational performance or the business. So the company shifted from an annual review to a quarterly based system, though he added that many managers objected to what they saw as going from one difficult conversation per year to four!
As part of this, each quarter we set out what the business wanted to achieve over the next quarter and this was cascaded down, said Dooley.
The organisation was growing quickly, said Dooley, and there was a fear that the culture and core values would be diluted, so it was decided to build Version 1’s core values into the process.
'Retention also became an issue so we built career development into the conversation and introduced engagement. We called this 'tugs and shoves' or talking about what is keeping you here and what is shoving you towards the door', said Dooley.
Dooley said that the organisation then realised that the managers did not have the requisite skills to engage in such conversations every quarter. So they invested in developing managers’ skills and built a performance conversation model that doesn’t necessarily have to be had every quarter end but instead could take place at any time. This started the process of performance conversations becoming part of normal day to day rather than being a big bang point in time conversation which people feared.
We still have quarterly ratings as you have to have goalposts and scorecards, though there is no forced ranking, said Dooley. Though closely linked to pay and bonus, he said, the focus is on the conversation and the process is about improving organisational performance.
Dooley said that as result of the changes, HR also had to switch from being a crutch to influencing, coaching and adding value to the business.
CARE: Creating A Remarkable Experience - ESB Innovation
Joyce Farrell, People and Transformation Manager with ESB Innovation, said that the ESB as an organisation went from a workforce of 13,000 twelve years ago to 5,600 today.
This presented a real challenge as to how the workforce could do more, with a lot less people, she said.
Farrell emphasised that at work you are dealing with the whole person and employees bring all their issues into work with them. 'This can be a real challenge for managers in a performance management system, particularly when task or project driven. If managers are not able to get the best out of staff, the project won’t be delivered', she said.
Farrell said three years ago, the company reviewed its performance management. It asked managers what was working, what wasn’t and how to get more out of it for both employee’s and the business.
What emerged, said Farrell, was that we were dealing with performance on one side and development on another, and both of those needed to be married into the one conversation.
So ESB took the opportunity to re-design the process which now integrates performance and development which are, she said, inextricably linked.
For the ESB, it is not about a process, said Farrell, it’s about sitting down and having meaningful conversations, building relationships with staff and ensuring they have clarity about their role and what the organisation expects from them and how their contribution counts to the overall success of the business.
So performance management was re-branded as My Goals, My Development. Farrell said that we encourage employees to take greater ownership of their career, and while the organisation can map out a career path, employees has must look for career opportunities and grab it with both hands.
To give greater line of sight and leverage more value from the employee value proposition and performance management. Farrell said HR created the CARE model for engaging employees: Creating A Remarkable Experience.
'It’s not about having two conversations anymore, it’s about having one enriching conversation', said Farrell. The model included how employees were connected to the organisation, how we attract them into the organisation and, with an average age of 37, how they develop professionally and grow personally in the organisation.
From focus groups, it was found that some managers were fearful that a conversation may go off track and that they did not have sufficient tools or skills to get it back on track. In response, Farrell said that they quickly developed a number of learning initiatives and tools to support managers in these conversations including a Leadership Conversations programme that is being rolled out to managers across ESB Group.
We put it to the managers, said Farrell that this was one of their KPIs and must lead by example to demonstrate their commitment to coaching staff to be the best version of themselves and this has to be evidence based.
Farrell said the ESB has not moved away from ranking scores, which are still linked to performance related pay and bonus on an annual basis. 'In the past HR’s energy was put into reactive policing of the performance management process and we were meeting a lot of resistance. Now it’s about empowering, enabling and proactively finding out where the blockages are and what we can do to support managers release them', said Farrell.
'It’s not just about creating a high performance culture, but about creating a high achievement culture where everyone’s contribution is recognised', she said.
Lively debate at roundtable discussion
After the case studies, the delegates discussed the effectiveness of their own performance management process in round table discussions. A high level of dissatisfaction was expressed across the board with the way performance was being managed in organisations. Delegates consistently expressed dissatisfaction with the ‘policing’ role that can fall to HR in checking that the process is being implement, and felt this needed to be replaced with an enabling role to support managers engage with employees.
This has clear implications for the development and skills needed by managers so they are able and given the time to engage and develop their teams.
Director of CIPD Ireland, Mary Connaughton, concluded that we are at a point where there is a real momentum for change, and HR needs to take the courage to act.