Tuesday, December 2, 2008

Performance MANAGEMENT

When you get right down to it, Performance Management is about negotiation. Each side wants something. Management wants employees to work harder, work smarter, work more and moreover, really care about what they are doing so they’ll sacrifice their personal lives for the greater good of the company. Employees want more money, more recognition, more career opportunities, more flexibility, better benefits, more autonomy, more coaching, more stock, etc. They also want to feel like they are part of a team, something greater than themselves. And as in any negotiation, both sides tend to bluff a bit. Management pretends to have a bevy of rewards that are specifically earmarked for top performers and employees pretend that their daily activities are aligned with corporate goals and that their performance was instrumental in helping the company meet them.

Not that these things are never true but the point is that even when they aren’t true both sides politely pretend that they are. Let's face it, it's human to want to put your best foot forward and 'Pay for Performance' has a much better ring than 'Punish Medicrity' or 'We Have No Money This Year But Thanks For All Your Hard Work.'

But here is a revelation that should shake the foundations of how we think about Talent Management: The key player in making this process successful is the manager. A good manager is more than someone with decent social skills who does an acceptable job of consolidating team metrics. A good manager is someone who makes employees feel important and valued. A good manager motivates people to either take on more responsibility or else be satisfied with the responsibility they have, as needed. A good manager makes employees believe they have a career path and that they are rewarded in accordance to their contributions, which is especially important when times are tough and there are no promotions or raises to be had. In other words, a good manager is equally versed in the art of mentoring employees and stringing them along.

Put simply, a good manager is someone who is able to broadcast the message: “I am interested in you, I believe in you, and I am doing my best for you.” And be believed.

From a corporate point of view the quality of managers is the single most important thing you can get right. Think about it: This is the person you are counting on to coax the best possible work out of average performers, motivate or identify and eliminate underachievers, and retain the loyalty and channel the energy of top performers. If we believe that people are important, how can manager performance not be a vital component of business performance?

Talent Management places ample focus on upper management, as evidenced by the adoption of succession planning at upper levels, cascading goals, benchmarking tools, etc. And there is plenty of focus on individual contributors - in fact most of the top performance management solutions offer various ways to drive edicts from on high downward, then measure if everyone’s following them. And I don’t want to argue with these – at the moment – because I find what’s missing more interesting than quibbling about what’s there. And what’s missing in all of this Talent Management analysis is focus on the manager, who of all people in any company should arrest our attention.

And yet as we review the various talent management solutions we see that they are depressingly focused on automation rather than interaction. Even more depressingly, it seems that many companies are looking for software solutions to supplement poor management rather than improve it, rather like treating the symptoms rather than looking for a cure.

Personally, I am riveted by the manager and I don’t think HCM specialists can continue to ignore this fascinating character. Not all managers are equally interesting from an HCM perspective, however. Truly great leaders are born, not made. So arguably, the best thing HCM solutions can do for the great manager is try to stay out of the way. A poor manager can do untold damage and would make an interesting topic for HCM but most companies are smart enough to weed out terrible managers on their own once enough people have complained or quit.
That leaves us with the average manager, who in many cases is quite decent, means well and does relatively little harm. The average manager offers ample scope for driving additional business success and is therefore interesting from an HCM perspective.

How can Talent Management solutions do a better job helping companies assess and develop the skills of the average manager?

Thursday, November 6, 2008

Response to Jim H's blog 'Keep the Performance Reviews!'

http://blogerp.typepad.com/hcm_research/2008/10/keep-the-performance-reviews.html#comments

I think we should keep the reviews but with less emphasis on the automation. I’ve heard it argued that canned feedback is better than nothing. This is probably true but there is sufficient research to indicate that personal recognition makes people feel valued, which can be more motivating than cash. I would therefore argue that better than nothing is not good enough.

Talent management is a human problem first and a software problem second. So far the leading talent management solutions have not solved the problem of poor management, which seems like a pretty important problem to solve if you want to attract, retain and motivate good people. Note that poor management can manifest in many ways, from failure to weed out poor performers to vague, confusing or conflicting corporate objectives, and automated performance reviews in a poor management environment will at best create some baby steps in the right direction and at worst bog everyone down in pointless activity.

Not that this is a criticism of talent management solutions because in all fairness, management of people isn’t a software problem. The criticism is that leading talent management solutions have implied that automating talent management processes is some sort of recipe for better management. The real solution is better management, which can’t be installed.

A performance review done well, with an emphasis on the people involved rather than complex cascading goals and what percentage of reviews are complete, can be tremendously value adding for everyone involved. So, I agree we should keep the reviews. But I think that the value add comes when people have an honest, constructive interaction that results in the right people being recognized and/or rewarded, not from the automation.

Wednesday, November 5, 2008

Is Talent Management getting away from automation?

A recent AMR report 'When Performance Management Worlds Collide, Business Will Benefit' made an interesting point that we are seeing a shift from automation to intelligence. According to this report, the key to great performance is the collision of personal, financial and operational goals and there's a great little diagram to illustrate these three things colliding.

There are also several good points made about keeping it simple and a great case study of a company using Success Factors to automate reviews and ending up with over 1000 unaligned goals.

OK I'm cherry picking the stuff I like here, but you get the idea.

Mind you, the report is a little vague about how this whole fusion of performance indicators into one holistic model thing actually works but I thought the general idea was on track.

While I've never been a huge fan of automating processes that depend on human interaction, I wonder if we aren't still putting the cart before the horse. Certainly the company and team performance are invaluable data points for a successful performance review but is that the chicken or the egg?

If you hire good people, give them clear objectives and treat them well financial performance will follow. What I'm saying is, most companies don't need some grandiose complicated new way to mash up performance indicators, they just need to treat their people well, treat their customers well, keep a reasonable eye on expenses and know what business they're in.

Or maybe that's a simpler way of saying the same thing.

Tuesday, October 28, 2008

Thoughts about Talent Management

In my role as an HCM strategist for a business software company I’ve been thinking about talent management and have identified what I think of as five popular ‘myths’ about talent management – there are probably more but these are my favorite five:

Myth 1:
Talent Management and Core HR are separate functions – this seems to be the de facto position of leading talent management solutions, but effective talent management requires consolidated access to employee, staffing and business data.

Myth 2:
Executive succession planning is essential for the ongoing success of any company – actually, from an employee performance and retention perspective at larger companies, managers have more direct impact than executives.

Myth 3:
Canned reviews are better than none- actually this is true, but it’s still not good enough and we shouldn’t settle for it.

Myth 4:
Process automation can improve management quality and employee satisfaction – ironically, while the judicious use of process automation may well make good managers more effective, it may have the reverse effect on bad managers.

Myth 5:
Cascading goals help employees feel more aligned with company goals – rarely does a purely top-down approach ensure anyone’s loyalty.

Pay, Performance and Pay for Performance
Let’s dig a little deeper: There seems to be pretty universal agreement that linking compensation management with performance is important and as a compensation specialist I was pleased to see that Yankee Group forecasts a 19.6 percent growth in compensation management over the next several years. Also on the compensation side, we see the need for a streamlined approach, a high degree of visibility into global compensation and the ability to provide managers with clear, consistent compensation guidelines. So, basically everyone agrees that compensation should be easy, consistent and fair.

On the performance management side it gets more interesting, however. To over-generalize everybody into two camps, one camp stresses the need for automation, for example, providing managers with pre-delivered employee review feedback. A few apologetic-sounding members of this camp argue that although personalized feedback would be ideal, canned feedback is better than nothing. Opponents claim that nothing makes an employee feel valued than personal recognition, which is more important than cash in some cases. If we agree with this, it does tend to make the canned review look pretty lame.

When we look at pay for performance there is even more controversy because apparently quite a few managers are either afraid of being disliked and give everyone a raise, or else inflate their performance figures to increase their own budget allocations, so that the average delta between high and low performers is pretty small. How un-motivating.

Despite a certain amount of controversy around whether pay for performance actually works, more than 75% of all U.S. companies connect at least part of an employee's pay to some performance measures. Generally speaking, these companies have either turned to best of breed solutions or built their own, each of which comes with its own set of challenges. Best of breed solutions must be integrated to core business systems in order to link to employee data, staffing processes and business performance results and that can be difficult to maintain. As for home grown solutions, they require a team of people to build, integrate and maintain the solution as well and also come with the risk of losing tribal knowledge when Joe, the guy who built it all without documenting anything, leaves the company due to disagreements with his manager.

Talent MANAGE-ment
Not surprisingly, discussions about talent management always seems to come back to the manager, who is apparently too busy to write an employee review from scratch, or else is too afraid of being disliked to penalize low performers.

So far the leading talent management solutions have not solved the problem of poor management, which seems like a pretty important problem to solve if you want to attract, retain and motivate good people.

Not that this is a criticism of talent management solutions because in all fairness, management of people isn’t a software problem. The criticism is that talent management solutions have implied that it is a software problem and that the solution is to automate talent management processes. The real solution is better leadership, which can’t be installed. To this day the number one reason top performers leave companies is their managers. And given how much attrition actually costs, no one can afford to lose good people to poor management.

So when I see that the main selling points of leading talent management solutions are communicating company goals from on high and automating managers’ jobs, I can’t help feeling like people are missing the point. When companies start holding managers accountable for managing maybe we’ll see some real talent management.

Talk to People
Talent management is a human problem first and a software problem second. If you are a company of any size you will still need some sort of technical solution to support your performance and compensation processes, although in their current form, isolated from core business applications and focused on automation, the long-term value proposition of TM-only solutions may be limited. But even more important is the good old-fashioned, non-technical art of conversation.

Companies that want to encourage good management won’t get very far without talking to people. This means making it a company priority for managers to talk to the people they manage, really talk to them; making a point of soliciting people’s feedback and allowing them to be active in decision making processes for their own careers; and talking to managers and employees about what they need to be successful. And of course, it also means being ready to remove poorly performing managers out of management roles.

Talent management software should be used to facilitate the talent management conversation, not automate poor management.
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