Reinventing performance management how to do it right

Rusty Lindquist Mykkah Herner VP HCM STRATEGY & IP MODERN COMPENSATION AT BAMBOOHR EVANGELIST AT PAYSCALE The Law of Inertia We tend to be carried forward in life by the inertia of our past @rustylindquist Performance Reviews 30% of performance reviews end up decreasing employee performance - Psychological Bulletin 58% of executives believe their current program doesn’t result in performance or engagement – Deloitte 70% 2/3 70% of companies are now reconsidering their performance strategy – Bersin of employees with highest performance scores aren’t actually the highest performers - CEB 6% of companies surveyed think performance reviews are worth their time - Deloitte 2% of HR executives say yearly evaluations are useful – Deloitte 80% of workers are dissatisfied with their perfpormance reviews – Deloitte 3% -5% improvement in performance is all managers believe will be generated in the process - CEB Performance Appraisals “Performance appraisals are perhaps the most reviled standard practice in all of management” Peter Cappelli Wharton School of Management “Why we love to hate HR” HBR A crisis of credibility It’s time to blow up HR and build something new Rethinking HR Why we love to hate HR What will it take to fix HR It’s time to split HR HR faces a crisis of credibility in the boardroom HR is our “favorite corporate punching bag” A Little History Ask Simple Questions Performance Questions Now Asked in BambooHR If Allison got a job offer elsewhere I would a Do everything I could to keep Allison We’d be in trouble! b Convince Allison to stay Allison would be difficult to replace c Need to think about it Allison does a decent job d Wish Allison well I’ll be able to find a better replacement anyway e Be relieved It’s not likely to work out anyway How engaged is Allison at work? a High engagement and a great attitude b Good engagement and a mostly positive attitude c Medium engagement and an okay attitude d Low engagement and is burned out e No engagement and is checked out What are some things Allison does well? How could Allison improve? Connecting Performance with Pay Modern Pay for Performance • Performance management aligned to business goals & cycles • Paying for results • Getting creative about both performance and pay How are companies linking Performance with Pay? • 50.1% • 61.8%* • 25.7%* based increases on performance give individual incentives give team incentives *of those giving bonuses “Employees won’t believe there is a link between pay and performance unless they can see it.” — Margaret O’Hanlon re: Think Consulting Linking Pay to Performance Performance-based rewards & recognition Results-based incentive plan Higher increases for top performers Culture and perks that reward high performers Incentive Pay • Bonus vs Incentive • Match incentive cycle to work cycle • Alignment: individual, team, organization • Additional structure considerations • Self-funding – variable costs • Keep it simple Base Pay Base pay increases are determined by performance and position in market-based range using a Merit Matrix Exceeds Meets Does not Meet What’s your Deal? Employees and employers are in a relationship where they agree to things • Exchange of value • Mental math – does it add up? Getting Creative Get Creative • • • • • • • Passes to sporting events Catered lunches for winning teams Days off after big deadlines Choice of work assignment Development opportunities Lunch with the CEO Remote work It’s not a best practice if it’s not best for your organization Thank you! BambooHR Receive a free job posting on our ATS and full HRIS for one week We will contact everyone within the next few days to set this up PayScale Download a free ebook around pay for performance http://bit.ly/29UBsHO Questions? Rusty Lindquist Mykkah Herner VP STRATEGIC HR INSIGHTS MODERN COMP EVANGELIST BAMBOOHR PAYSCALE @rustylindquist @mykkah_herner rusty@bamboohr.com MykkahH@payscale.com www.linkedin.com /in/rustylindquist www.linkedin.com/in/mykkahherner ... https://www.washingtonpost.com/news/on-leadership/wp/2015/07/21/in-big-move-accenture-will-get-rid-of-annualperformance-reviews-and-rankings/ GE (2015) PROBLEM Removed stacked rankings, firing the bottom 10... check-ins allowed Adobe to have a lightweight process that served—rather than distracted from—people doing their best work.” http://www.businessinsider.com/adobe-abolished-annual -performance- review-201 4-4 ... to hate HR What will it take to fix HR It s time to split HR HR faces a crisis of credibility in the boardroom HR is our “favorite corporate punching bag” A Little History Performance Problems