CIPD Podcast 25 - Performance management

Date: 27/10/08 Duration: 00:16:47

In this podcast, performance management is discussed by Stephen Moir, Director of People and Policy for Cambridgeshire County Council , Stephen Sidebottom, Head of Human Resources, Nomura International plc , Michael Spiers, HR Partner for Trading & Commercial at Sainsbury's Supermarkets Ltd.  and Angela Baron, CIPD's Adviser for Organisation and Resourcing.


Philippa Lamb : Hello and welcome to the programme. In this podcast we’ll be taking a closer look at Performance Management. It’s a core part of the HR lexicon but there always seems to be plenty of debate about how to do it. One thing most in HR seem to agree on is how important it is to get it right. For this programme we've caught up with some really big organisations: Sainsburys, Cambridgeshire County Council and Japan’s largest investment bank Nomura to find out how performance management works for them. You can find out more about the people featured in this programme by taking a look at the ‘Show Notes’ that accompany the podcast. They’re 

To start off with I spoke to Angela Baron. She's the CIPD’s adviser on organisation and resourcing. The CIPD has produced a lot of research in this area over the past ten years so I asked her what it revealed about how performance management can make an impact and why it matters.

Angela Baron: Some of the best practice that we could see emerging was where performance management was really acting as a portal to talent management. So by going through the performance management process managers were able to identify people who were willing, wanted to move on to progress their careers, had further potential to develop and therefore access them into a talent management process to give them a range of opportunities where they might do that. 
I’ve sometimes had a few problems with talent management, that it can sometimes imply sort of exclusivity, that we have talent that we’re managing and what happens to the rest of them? But I think, you know, the best systems are where it’s very inclusive, where everybody has access to some kind of process of review, to review where they’re at in terms of their performance because everybody needs to know what is it I need to do my job and how can I do my job better? That is just a basic process of managing. It’s not rocket science really. It is about giving line managers a tool to be good line managers.

PL: It’s clear that performance management is about everyone in the organisation as everyone's performance makes a difference but developing a standard framework can be quite a challenge especially in organisations that carry out a diverse range of work and functions. 
I spoke to Stephen Moir, director of people and policy for Cambridgeshire County Council and he gave me an idea of the very wide range of the council’s remit.

Stephen Moir: In Cambridgeshire County Council we've got about 18,000 people that work for the Authority, very diverse, ranging from colleagues in 230 plus schools, so lots of teachers, lots of school-based support staff through to social workers dealing with vulnerable adults, children and young people. They we've got highways engineers, people that deal with potholes. What else have we got? Oh we've got the usual array of finance, IT and HR people of course because you can’t run a half billion pound business without good infrastructure and support. So a nice mix but causes interesting tensions in how you deal with different groups in terms of performance management, how you communicate that to them.

PL: That really is a mix of very different roles so how do you go about developing a performance management programme for all employees? Where do you even start?

SM: Well we have one framework for performance management that applies across the board and yes a lot of it’s number crunching and data and hard measures that are useful at senior levels to inform decision-making particularly and our politicians like that and if I'm talking to finance people they love figures, so that's good they like trends. If I'm talking to a social worker or if our manager is dealing with social workers and we want to get them to think about performance management and understand what that means we talk about outcomes for service users so we would say to a social worker, “We need you to focus on ensuring this person is discharged from hospital in this amount of time and it’s really important to them because we want to get them back into the community, we want to get them living in their own home, we want to get them attending the course they were doing as part of the adult learning offering,” so you’re talking about impact upon people and families to particular individuals but behind the scenes what you've just done is you've just talked about a performance indicator we share with the NHS on discharge time from hospital. We've talked about people independently living performance indicator and you've talked about number of older people living in communities taking up adult learning. So it’s techniques like that we have to help managers use according to the group of staff they deal with.

PL: You say this lightly but it’s actually enormously complicated.

SM: It is but there's story telling and actually that's probably one of the real cultural techniques, the ability to tell stories and promote good performance through the organisation by effective internal comms and bringing it to life. I mean everything we do touches on people in some shape or form or the community. So if we always bring the stories to life around communities, around individuals it has a lot more meaning for our frontline staff. It’s actually hugely relevant to our politicians because of course it’s their electorate as well. So the story telling technique is really powerful but it has to be backed up by hard data and robust systems.

PL: For Cambridgeshire County Council then getting the communication right is a crucial part of the process. It’s about defining performance in the right terms. Next I spoke to Michael Spears, the HR partner for trading and commercial at Sainsbury. I asked him how they go about measuring performance in a competitive retail environment. Are sales targets the ultimate performance measure?

Michael Spears: Absolutely the start has to be with target setting so in a very straightforward sense we use target setting forms but what we try and do is capture on the forms at the time that we set the targets how, because we’re in a business where and certainly the environment that we’re in at the moment, the commercial environment at the moment is constantly changing and it really News 24 at the moment in that respect so it’s far more important that when we come to measure your performance we have a real understanding of what you did in relation to what you said you were going to do because who knows what could happen tomorrow. I could set you a sales target, I could set you a performance target, that might seem very clear today and six months down the line when we come to do our final measure on it the market may have changed substantially. So capturing the what and the how are really important at that stage and we need to make sure we’re very clear how you’re going to do it because in effect we’re really measuring how. So if you did exceptionally well did you get that by default? Did you just simply have a lucky experience, competitor closed across the road or a coach load of tourists turned up and shopped in your store that day and spent a fortune or did you really, not achieve your targets but actually conversely you did everything that you said you were going to do and more to try and get there but the external market was simply running against you. The outcomes have to drive - we’re a business, we’re a commercial business and we have to be driven by our results at the end of the day but very much on a one to one level, it’s very much the how, how do you go about achieving your targets.

PL: So performance isn’t simply about the direct outcomes but the employees’ behaviours in the delivery of those outcomes, quite a complex thing to measure and evaluate. I asked Angela about the level of training needed for the line managers who were carrying out those assessments. What are the skills they need to effectively manage performance to really make all this work?

AB: It’s not enough just to teach managers how to do a performance appraisal. You've also got to enable them to understand why they’re doing it because if you want this to be something that is a really -- and buy in from managers is absolutely essential to performance management. This is a tool for managers to manage well. It’s not a process for HR to police. So it should not be seen as a box-ticking HR process, something you do to keep the personnel department happy once a year.

PL: So management buy in then is an absolute must but how do managers in turn get feedback on their efforts? I wanted to find out how organisations go about measuring the data so I asked Stephen Moir how they evaluate performance management at Cambridgeshire County Council.

SM: We conduct a whole workforce employee survey using MORI. So we benchmark. We also, last year, had our second cultural audit from the Institute of Employment Studies, so we've done a diagonal slice of the organisation to get qualitative feedback on top of the hard stuff from the employees’ survey. We ask specific questions in the employees’ survey around my manager. The levels are really positive. The feedback around quality of line management in the organisation is very positive but importantly we also know the pockets of poor practice as a result of doing that so we can then go and address it. People get praised for good performance, people get supported to improve their performance and people leave if they don’t perform.

PL: Next I spoke to Stephen Sidebottom, head of human resources Europe at Japanese Investment Bank Nomura. I wanted to know what type of performance management strategy works well in an investment bank.

Stephen Sidebottom: A few years ago when I first joined Nomura we had a performance management system which, in my view, delivered no value to the business. It was-- no net value anyway, I mean it was time-consuming, difficult, burdensome, very diff-- you know just the interface with it from a technical point of view was hard. So, from my perspective, that was just something to abandon. We've developed a 360 degree approach which has been, I think, pretty well received. Investment bankers are quite sceptical about things like that and if they see them as HR interventions they’re not massively enthusiastic and how we’ve developed this is actually the other way so we've worked with the businesses to identify how they measure performance, what are the things that they actively manage and what we've done is to build up the system that integrates into that and is fed from our finance systems on a daily basis with all that data. So it’s real to people. It’s a source of useful data for them. So, from that we have had a good uptake and because we ask 360 questions which are role-specific and much more intuitive and therefore easy to answer. I mean you could answer those questions about people if it is part of their job when you would expect to see them doing it. That makes the whole thing must faster, much more intuitive and we use the data.

PL: So by approaching performance very much in business terms they made it much easier to engage managers in the process but in such a busy environment where there are conflicting demands on managers’ time you’d expect a certain amount of resistance. I asked Stephen how difficult it had been to get the purpose of this across.

SS: When we redesigned the processes with the businesses they asked for them to be shorter and for them to be less time-intensive. We said, “No,” that wasn't the right approach. It’s not about reducing the time it’s around maximising the value of the input. So it’s all around perceived value and we don’t have a problem with managers nor to recognising the return to them from that. They know that in a business like ours providing feedback is important. They understand the criticality of the decisions they make around people, as managers, and they recognise that the data that we collect through this process is valuable and useful to them in doing that and it’s also valuable to the individuals themselves. Having said that, it is designed to be intuitive and easy. So one of the criteria that I set out when we looked, for example, at the 360, is that I wanted it to be as easy to complete as a Marie Claire questionnaire, as intuitive and as short, if possible, and yet to have underlying rigour and we have managed to combine that.

PL: It seems fairly clear that having a good performance management framework can be a hugely useful management tool. It helps identify performance problems and training needs but on the other side of the spectrum flags up star performance and helps to identify future business leaders. To this end then it’s clearly worth putting the effort into developing good performance management processes which are easier to use and understood by all. But can we take this one step further and say that performance management directly impacts on business performance? Is all this really adding to the bottom line?

AB: It’s almost been a leap of faith that if you raise individual levels of performance organisational levels of performance will improve won’t they? We did try in 1997 to prove this…

PL: That was my next question. How do you measure this?

AB: Well we did try to prove it and we did try to see if there was a correlation between independent financial performance from companies and the existence of performance management.

PL: Right.

AB: We didn’t manage to prove that categorically because performance management, of course, is linked with so many other processes. However there is good evidence available from us at the CIPD and from others that if you manage people well in terms of having a set of key practices in place which tend to always include performance management then better business improvement results from that. The argument being that if you manage people well they have high levels of skills, they’re more engaged, they’re more motivated to exhibit discretionary behaviour which is the difference between good performance and excellent performance and that feeds through into financial performance and hence business performance. There is evidence to support that.

PL: I asked Michael Spears the same question. How does Sainsburys go about measuring the impact of its performance management system and is he confident that this is improving Sainsbury’s business performance?

MS: I’m sure I could put together lots of statistics that would prove it but to me it’s a very straightforward metric if you have better engaged colleagues it naturally feeds through to your bottom line, they feel better attuned to the business, they care more about what’s going on in the business. Simple things, if you’re sitting on a checkout and you are really, really in tune with what you need to achieve, how you can improve sales, you go that extra mile and you have that conversation with the customer. You talk to the customer and you feel engaged with the customer about what kind of things might go with that soup they’ve bought and those sorts of things are really obvious to me and I share the fact that they may not be obvious to people who want to see a tangible link but to me it’s almost something that defies the need for proof.

PL: We've heard some very good examples of what organisations are doing to get performance management right. I asked Angela Baron about performance management and pitfalls we need to be mindful of.

AB: Some of the sort of classis pitfalls that organisations fall into is they give out mixed messages. So, for example, you know they will say through the performance management process, “Ah! the team is important,” so being a good team member, acting as part of a team but then if you pay people individualised performance-related pay, based on their individual performance then you’re giving out a very mixed message. So that's a classic. 
The others are around very bureaucratic rating systems where people are given a number of a letter, you know, “You’re a three or you’re a B,” or whatever, without really understanding what that means. So, you know, and sometimes ratings are good, sometimes it helps with the sort of objectivity of performance management but ultimately performance management is about people understanding what is expected of them.

PL: Finally I asked Michael Spears for his perspective on what types of performance are best addressed through a performance management approach. When should you use it as a tool?

MS: Performance management is something that should be done at all times for good and bad reasons. When the going gets good and when someone’s going great guns and doing a great job that's a great time to sit down and review performance and keep that sustained performance by saying, you know, “You’re doing great,” and celebrate the success and also learn from it, from how they can share it with other people so they’re not working in silos. Performance management isn’t something that you just take out of the drawer when you've got a particular issue that you want to deal with. That isn’t coming from, going back to something I said earlier, that isn’t coming from the love place, coming from a tough love place, that's coming from a process place. If you really care about someone you never allow yourself to get to that. So doing it consistently and doing it when it’s good and bad.

PL: I hope you've found this an interesting look at the ever popular subject of performance management. Remember you can find more information about the subjects we cover in each programme in the ‘Show Notes’ at .

Our next podcast will be taking a look at the current industrial relations climate and the challenges it poses for HR professionals. Until then goodbye.


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