At time when skills are in increasingly short supply, New Zealand is apparently mired in productivity deficit – and we’re haemorrhaging workers across the ditch at rate of around 400 week, the need to ensure employees are fully engaged in lifting their own and their organisation’s performance has never been stronger.
Which is pretty much what next month’s Employee Performance Management Summit is all about. It’s not just question of rating people’s performance at year’s end in order to slot them into remuneration scale – it’s much more about establishing clear links between their own roles or development goals and their company’s growth strategies.
If people have personal sense of ownership for the business results then they’ll go the extra mile for you both in terms of their performance and their discretionary effort regardless of where they sit in the organisation – that’s what defines “engagement”, according to one of the Summit’s keynote speakers, Harold Hillman.
Formerly talent manager for Fonterra and now running his own consultancy Sigmoid, Hillman says the trick is to create tighter, more transparent links between individual capability and business growth strategies. Too often those conversations are held at different times – or in different organisational silos.
“There tends to be disconnect – the two processes sit separately from one another and the interdependencies are not terribly explicit. good performance management process is not only about assessing people and compensating them accordingly – it’s about how you make this person more capable in the interests of being able to deliver on their objectives. So it’s about blending appraisal and compensation with [personal] development and rigorous talent management process.”
It’s part of developing what Hillman refers to as “line of sight” between employee input and company objectives.
“I’m more likely to feel sense of personal ownership for the business results if I actually know what the objectives are and how the work I do on daily basis actually feeds into those objectives and strategies.”
Creating that line of sight is one of three components for building engagement, says Hillman. The second is providing sufficient feedback loops so employees at all levels can provide input into the work they do – and know they have been heard by seeing their feedback reflected in some of the decisions being made in the organisation, says Hillman.
“Then there’s the employee value proposition. People join company because they have an expectation they are going to develop some kind of capability – skill set or mind set. That expectation that ‘I am going to grow’ here is the third component of engagement.”
Growing capability
The expectation for growth is made very explicit in the performance management process at IAG – one of several case studies being presented at the Summit. It’s actually called GROW and is all about capabilities and results.
“The system is divided into two primary areas,” says the company’s head of human resources Fiona Michel. “The first is around understanding an employee’s capabilities. For every job or role we have, part of the job description outlines what capabilities are aligned with that role and what level of expectation that role needs to achieve. So it’s clear from the outset what sorts of behaviours and capabilities are required of the individual.
“One of the most fundamental elements of our performance management system is this behavioural process that managers formally discuss with each employee on six- or 12-month basis.”
The second part is the “scorecard” or the agreed targets or goals the company is looking to reach – usually combination of financial targets, people targets and customer risk management.
“Typically if we’re talking about GROW within the organisation, our employees would probably talk about capabilities before they’d talk about the results side because the focus is very much on getting the behaviours right – and the results will come,” says Michel.
Capabilities are divided into three sets. There are the shared ones everyone in the company works to – fundamentals like good communications. The ‘role’ capabilities are more personalised to the particular individual and what they’re expected to achieve in their role; the third set is for people managers.
“We really try and acknowledge the importance of our people management processes,” says Michel.
The whole process is linked into the company’s long-term goals – and its values.
“We have five values the company adheres to and these are things we talk about on daily basis – they’re not just on piece of paper stuck on the wall,” says Michel. “Our social responsibility value for example – as company we are very aligned to our sustainability initiatives which are great attractor for staff and something we feel very committed to and passionate about.”
The other four are integrity, teamwork, transparency and meritocracy. The last two are very evident in system that clearly links performance and reward across remuneration matrix that also reflects the market value of the role. All of this is available on the company’s intranet so employees can readily see where they sit in terms of remuneration for their roles.
They are also given sense of control over their own development options. IAG uses an online tool that gives employees (and their managers) the opportunity to rank themselves as to how they feel they’re performing against expected behaviours, explains Michel. This can also be used to signal where they might need development support.
“There’s framework called ‘my learning’ which aligns with the capabilities that people talk about in their performance reviews and looks at wide range of mechanisms they can use to improve their skills – it could be training courses, online learning or on-the-job development. There is enough diversity in both the programmes and
processes we support to allow individuals to drive their own development as well as providing opportunities for managers to support, acknowledge and progress talent.”
The company has formal process for employee feedback through an annual engagement survey – and gets good response rate, says Michel.
“We use the Hewitt’s Engagement Survey which gives us huge verbatim feedback from individual staff so it’s fabulous way to really understand where people are at. Typically we get 90 percent completion rate which, with more than 2000 staff, is very high.”
It’s not all roses, says Michel, but there’s some good constructive feedback which provides opportunities for reviewing how the company could do things differently. And in terms of engagement level, the score across all its staff in the three main centres (Auckland, Christchurch,
Wellington) and scattered around the country was 55 percent, says Michel.
“Best practice organisations tend to be at the 60-plus percent level so that is our challenge and we’re actively working on that.”
Culture change
Creating the sort of cultural change that generates greater staff engagement and sustained performance improvement at an organisational level is not an overnight process. Beware the CEO who comes bearing mantras of organisational transformation and culture change – real and sustained change happens in an organic way rather than just at the behest of new leader, warns Grant Herman.
Co-founder of ChangeWorks and sessional lecturer in Strategic Human Resource Management at Victoria University Management School, Herman works in the area of organisational capability and organisational change and says it doesn’t happen by management decree.
“One of the problems you have is that lot of senior executives come into their jobs with mandate to change things and there’s often temptation to focus on structure because that sort of change is fairly visible and relatively easy. You can change reporting lines, deconstruct some jobs, fashion new ones, reduce reporting layers and it looks differ
