HRM Innovation in Reinventing Performance Management and Compensation

PRESENTATION OVERVIEW
• PERFORMANCE MANAGEMENT BEST PRACTICES
• COMPENSATION BEST PRACTICES
• INTEGRATION INTO A STRATEGIC TALENT MANAGEMENT STRATEGY
• QUESTION AND ANSWER SESSION
WWW.INTL-ABMC.COM - HR INNOVATION IN PERFORMANCE
MANAGEMENT CONSORTIUM 2018

RE-INVENTING PERFORMANCE
MANAGEMENT
WWW.INTL-ABMC.COM - HR INNOVATION IN PERFORMANCE MANAGEMENT CONSORTIUM 2018

WWW.INTL-ABMC.COM - HR
INNOVATION IN PERFORMANCE

the redesign of performance management is now a HIGH PRIORITY FOR 79% OF EXECUTIVES (Deloitte)

THE
CHANGING
ROLE OF HRM
(COTTER,
2017)
FROM TRANSACTIONAL HRM TO
TRANSFORMATIONAL AND ULTIMATELY,
STRATEGIC
FROM BEING IMITATORS TO INNOVATORS
FROM BEING TROUBLEMAKERS TO BEING
TROUBLESHOOTERS
FROM PERFORMANCE ADMINISTRATOR TO
(STRATEGIC) PERFORMANCE ADVISOR
WWW.INTL-ABMC.COM - HR INNOVATION IN PERFORMANCE MANAGEMENT
CONSORTIUM 2018

STRATEGIC
PERFORMANCE
ADVISOR
WWW.INTL-ABMC.COM - HR INNOVATION
IN PERFORMANCE MANAGEMENT
CONSORTIUM 2018

THE CHANGING ROLE OF HRM
•HR PRACTITIONERS’ ROLES ARE TO DIAGNOSE, SUPPORT AND COACH MANAGEMENT ON PEOPLE
MANAGEMENT ISSUES.
•TO REVIEW, REDESIGN AND IMPLEMENT HR SPECIFIC PROGRAMMES INCLUDING LEARNING AND
DEVELOPMENT, PERFORMANCE MANAGEMENT AND REWARD MANAGEMENT.

RE-INVENTING
PERFORMANCE
MANAGEMENT
RE-ENGINEERING THE ANNUAL REVIEW CYCLE
CHANGE
#1:
SHIFT FROM PERFORMANCE RATINGS TO
STRENGTHS-BASED PERFORMANCE
COACHING
CHANGE
#2:
CONTINUOUS PERFORMANCE MANAGEMENT
SOFTWARE OVER APPRAISAL SOFTWARE
CHANGE
#3:
AUTOMATION, APPS, SIMPLICITY AND AGILITY
CHANGE
#4:
PERFORMANCE DISCUSSION AND FEEDBACK
TO PERFORMANCE DIALOGUE
CHANGE
#5:
CONSORTIUM 2018

RE-INVENTING
PERFORMANCE
MANAGEMENT
CROWD-SOURCED PERFORMANCE DATA,
PEOPLE ANALYTICS AND SNAPSHOTS
CHANGE
#6:
PERSONALIZATION AND EMPLOYEE
EXPERIENCE
CHANGE
#7:
PERFORMANCE DIFFERENTIATION
CHANGE
#8:
SHIFT FROM PERFORMANCE MANAGEMENT TO
PERFORMANCE IMPROVEMENT
CHANGE
#9:
DE-COUPLING PERFORMANCE AND
COMPENSATION
CHANGE
#10:
CONSORTIUM 2018

CHANGE #1: RE-ENGINEERING THE ANNUAL REVIEW
CYCLE
• ESCALATION OF COMPANIES SPENDING TIME AND ENERGY TO IMPROVE THE LINK BETWEEN THE INDIVIDUAL GOALS
AND OVERALL BUSINESS STRATEGY.
• INNOVATIVE NEW WAYS OF MAKING PERFORMANCE REVIEWS A CONTINUOUS AND TRANSPARENT PROCESS.
• BUILDING A NEW, FLUID ONGOING PROCESS FOR GOAL SETTING, COACHING, EVALUATION AND FEEDBACK.
• CONTINUOUS EMPLOYEE PERFORMANCE MANAGEMENT SOLUTIONS THAT INCORPORATE OBJECTIVE SETTING AND
MANAGEMENT, WEEKLY FEEDBACK SURVEYS, 1-ON-1 MEETINGS, AND QUARTERLY REVIEWS.

ACCENTURE
MICROSOFT
ADOBE
DELOITTE
MEDTRONIC
GAP
GENERAL ELECTRIC
INTEL
NETFLIX
• ACCORDING TO CLIFF STEVENSON, A SENIOR RESEARCH ANALYST FOR THE INSTITUTE FOR CORPORATE
PRODUCTIVITY, TO DATE NEARLY 10% OF FORTUNE 500 COMPANIES HAVE ABOLISHED THEIR ANNUAL
RATINGS.
WHAT DO THE FOLLOWING COMPANIES HAVE IN
COMMON?

CHANGE #2: SHIFT FROM PERFORMANCE RATINGS TO STRENGTHS-
BASED PERFORMANCE COACHING
• REPLACE “RANK AND YANK” WITH COACHING AND DEVELOPMENT
• HELP EMPLOYEES ALIGN THEIR GREATEST TALENTS TO THE EXPECTATIONS AND RESPONSIBILITIES OF THEIR ROLES.
• INCORPORATE STRENGTHS INTO PERFORMANCE CONVERSATIONS AND REVIEWS AND HELP EMPLOYEES SET GOALS
BASED ON THEIR STRENGTHS.
• FOCUSING ON STRENGTHS IMPROVES EMPLOYEES’ LIVES AND THE ORGANIZATION’S BOTTOM LINE – FACILITATES A
WIN-WIN SITUATION

CHANGE #3: CONTINUOUS PERFORMANCE MANAGEMENT
SOFTWARE OVER APPRAISAL SOFTWARE
• HAVING SOFTWARE THAT ACTIVELY ENCOURAGES BEST PRACTICE PERFORMANCE MANAGEMENT, REMINDS PEOPLE OF WHAT THEY NEED TO
DO AND WHEN AND PROVIDES VISIBILITY TO HRM OF WHO IS AND ISN’T DOING IT IS ESSENTIAL FOR SUCCESS.
• AN ACCELERATION OF COMPANIES PROCURING PURPOSE-BUILT CONTINUOUS PERFORMANCE MANAGEMENT SOFTWARE RATHER THAN
ANNUAL APPRAISAL SOFTWARE.
• CONTINUOUS PERFORMANCE MANAGEMENT SOFTWARE WILL MAKE IT EASIER FOR MANAGERS AND EMPLOYEES TO COLLABORATIVELY MAP
OUT CAREER TRAJECTORIES, AND TO PROVIDE THE COACHING AND MENTORING THAT PEOPLE NEED TO BECOME THEIR BEST SELVES.
• ORGANIZATIONS WILL ADOPT PERFORMANCE MANAGEMENT TOOLS THAT ENABLE EMPLOYEES TO RECEIVE AND REQUEST FEEDBACK IN REAL
TIME, SEND AUTOMATED REMINDERS FOR REGULAR CHECK-INS WITH MANAGERS, CHAT FEATURES AND PEER TO PEER INTERACTION.
• ALL THE DATA CAN BE CAPTURED TO MAKE DECISIONS THAT IMPACT BUSINESSES AND GIVE A CLEAR VIEW OF WHAT IS IT THAT EMPLOYEES
WANT.

CHANGE #4: AUTOMATION, APPS, SIMPLICITY AND
AGILITY
• HIGH TECH/HIGH TOUCH
• COMPANIES WANT SOFTWARE THAT IS SIMPLER, LIGHTER TOUCH, FLEXIBLE AND WHICH SUPPORTS MEANINGFUL
DISCUSSIONS AND FEEDBACK, RATHER THAN A SYSTEM WHICH JUST CAPTURES DATA AND AUTOMATES OUTDATED
APPRAISAL PROCESSES.
• COMPANIES NO LONGER NEED FEATURE-RICH TECHNOLOGY AS IT IS MORE EXPENSIVE, LESS RELIABLE AND ACTS AS A
BARRIER TO GOOD PERFORMANCE MANAGEMENT.
• SIMPLER SOFTWARE REQUIRES LITTLE TO NO TRAINING, AND ENCOURAGES PURPOSEFUL DIALOGUE RATHER THAN
PREVENTING IT.
• EXAMPLE: EMPLOYEES AT GE NOW USE A SIMILAR TOOL, CALLED PD@GE, WHICH HELPS THEM AND THEIR MANAGERS TO KEEP
TRACK OF THE COMPANY’S PERFORMANCE OBJECTIVES EVEN AS THEY SHIFT THROUGHOUT THE YEAR.

CHANGE #5: PERFORMANCE DISCUSSION AND
FEEDBACK TO PERFORMANCE DIALOGUE
• ATTENTION WILL MOVE FROM QUANTITY TO QUALITY OF CONVERSATIONS AND FEEDBACK.
• IN 2018, COMPANIES WILL INCREASINGLY BE EVALUATING THE QUALITY AND IMPACT OF PERFORMANCE MANAGEMENT DIALOGUE BETWEEN
MANAGERS AND EMPLOYEES.
• COMPANIES ARE SHIFTING AWAY FROM ANNUAL APPRAISALS TO MORE REGULAR ‘CHECK-INS’ AND FREQUENT REAL-TIME FEEDBACK
• ATTENTION IS NOW BEING TURNED TO HOW TO MAKE PERFORMANCE DIALOGUE MORE MEANINGFUL.
• PERFORMANCE MANAGEMENT FRAMEWORKS OR SYSTEMS SHOULD ENCOURAGE FUTURE-FOCUSED, DEVELOPMENTAL DIALOGUE
SUPPORTED BY IN-THE-MOMENT, QUALITATIVE FEEDBACK.
• BETTER DATA BACK UP A SHIFT IN EMPHASIS FROM BACKWARD-LOOKING EVALUATIONS TO FACT-BASED PERFORMANCE AND DEVELOPMENT
DISCUSSIONS, WHICH ARE BECOMING FREQUENT AND AS-NEEDED RATHER THAN ANNUAL EVENTS.

CHANGE #6: CROWD-SOURCED PERFORMANCE DATA,
PEOPLE ANALYTICS AND SNAPSHOTS
• COMPANIES ARE COLLECTING MORE OBJECTIVE PERFORMANCE DATA THROUGH SYSTEMS THAT AUTOMATE REAL-TIME
ANALYSES.
• RATHER THAN RELYING ON A ONCE-A-YEAR, INEXACT ANALYSIS OF INDIVIDUALS, COMPANIES CAN GET BETTER
INFORMATION BY USING SYSTEMS THAT CROWDSOURCE AND COLLECT DATA ON THE PERFORMANCE OF PEOPLE AND
TEAMS.
• CONTINUALLY CROWD-SOURCING PERFORMANCE DATA THROUGHOUT THE YEAR YIELDS EVEN BETTER INSIGHTS.
• PEOPLE ANALYTICS WILL NO LONGER BE A NICE-TO-HAVE PART OF THE HR PERFORMANCE MANAGEMENT TOOLKIT, BUT
AN ESSENTIAL COMPONENT.
• EXAMPLE: DELOITTE EFFECTIVELY USE PERFORMANCE SNAPSHOTS

CHANGE #7: PERSONALIZATION AND EMPLOYEE
EXPERIENCE
• IN 2018 MORE MANAGERS WILL CHANGE THEIR MANAGEMENT STRATEGY TO TAKE A PERSONALIZED APPROACH TO MOTIVATING INDIVIDUALS TO
HELP THEM MEET THEIR PERFORMANCE GOALS, WHICH IN TURN WILL BOOSTS TEAM PERFORMANCE.
• ORGANISATIONS HAVE BECOME INCREASINGLY EMPLOYEE-FOCUSED AND LESS PROCESS-DRIVEN.
• TODAY’S EMPLOYEES DESIRE AUTHENTIC RELATIONSHIPS WITH MANAGERS AND OPPORTUNITIES FOR DEVELOPMENT
• WHILE MUCH ATTENTION HAS BEEN FOCUSED ON IMPROVING EMPLOYEE ENGAGEMENT, ORGANIZATIONS WILL ALSO SHIFT FOCUS TO
IMPROVE EMPLOYEE EXPERIENCE. THIS INVOLVES A MORE HOLISTIC APPROACH THAT FOLLOWS THE ENTIRE EMPLOYEE JOURNEY, MUCH LIKE
COMPANIES MAP THE ENTIRE CUSTOMER JOURNEY.
• EMPLOYEE EXPERIENCE AIMS TO PROVIDE POSITIVE TOUCH POINTS IN WORK CULTURE, TECHNOLOGY, AND PHYSICAL ENVIRONMENT. THIS INCLUDES
EQUIPPING PEOPLE TO MEET THEIR GOALS, IMPLEMENTING EFFECTIVE EMPLOYEE TRAINING AND DEVELOPMENT STRATEGIES, AND HELPING THEM TO
FEEL MORE PASSIONATE AND CREATIVE ABOUT THEIR WORK.
• ORGANIZATIONS WILL DESIGN THE EMPLOYEE EXPERIENCE AROUND DATA ON HOW PEOPLE WORK, MAKE DECISIONS, AND ORGANIZE THEIR DAY.

CHANGE #8: PERFORMANCE
DIFFERENTIATION
• EFFORTS ARE FOCUSED ON IDENTIFYING AND ADJUSTING REWARD
FOR ONLY THE TOP PERFORMERS AND THE UNDER-PERFORMERS,
RATHER THAN EVERYONE.
• SOME COMPANIES ARE RETHINKING WHAT CONSTITUTES
EMPLOYEE PERFORMANCE BY FOCUSING SPECIFICALLY ON
INDIVIDUALS WHO ARE A STEP FUNCTION AWAY FROM AVERAGE—
AT EITHER THE HIGH OR LOW END OF PERFORMANCE—RATHER
THAN TRYING TO DIFFERENTIATE AMONG THE BULK OF EMPLOYEES
IN THE MIDDLE.
• EXAMPLE: 500% COMPENSATION DIFFERENTIAL IN KEY POSITIONS
AT GOOGLE
CONSORTIUM 2018

CHANGE #9: SHIFT FROM PERFORMANCE
MANAGEMENT TO PERFORMANCE IMPROVEMENT
• AS ORGANISATIONS MAKE THE TRANSITION FROM PERFORMANCE MEASUREMENT TO PERFORMANCE IMPROVEMENT, THE DATA THEY NEED
WILL CHANGE.
• HR PROFESSIONALS WILL NEED TO BE MONITORING HOW OFTEN PERFORMANCE CHECK-INS ARE TAKING PLACE AND HOW FREQUENTLY
FEEDBACK IS BEING GIVEN.
• HR WILL ALSO NEED TO UNDERSTAND THE IMPACT THESE INTERVENTIONS ARE HAVING ON EMPLOYEE MORALE AND PERFORMANCE.
• THIS WILL PROVIDE THEM WITH THE INSIGHT THEY NEED TO UNDERSTAND WHO THEIR BEST MANAGERS ARE AND WHICH MANAGERS NEED
COACHING AND SUPPORT TO BETTER DEVELOP THEIR TEAMS.
• GALLUP DEVELOPED THE ENGAGEMENT CREATION INDEX (ECI) — AN INNOVATIVE TOOL DESIGNED TO IDENTIFY AND MEASURE THE TALENT
FOR ENGAGING OTHERS — TO HELP ORGANIZATIONS TRANSFORM THEIR ENGAGEMENT DYNAMIC BY ADJUSTING THEIR HIRING PRACTICES.
ECI CAPTURES A CANDIDATE’S ABILITY TO ACT AS A CATALYST TO BUILD ENGAGED WORK TEAMS.

CHANGE #10: DE-COUPLING PERFORMANCE AND
COMPENSATION
• COMPANIES WILL ABANDON PERFORMANCE RELATED PAY ENTIRELY IN 2018. INSTEAD, PAY DECISIONS WILL BE BASED ON
MARKET RATE AND RESPONSIBILITY AND BONUSES ON TEAM OR COMPANY PERFORMANCE.
• PERFORMANCE DATA ARE USED LESS AND LESS AS A CRUDE INSTRUMENT FOR SETTING COMPENSATION.
• SOME COMPANIES ARE SEVERING THE LINK BETWEEN EVALUATION AND COMPENSATION, AT LEAST FOR THE MAJORITY OF THE
WORKFORCE, WHILE LINKING THEM EVER MORE COMPREHENSIVELY AT THE HIGH AND LOW ENDS OF PERFORMANCE.
• TAKE THE ANXIETY OUT OF COMPENSATION.
• A SHIFT FROM A SINGLE RATING ON WHICH ANNUAL BONUSES OR INCREASES ARE DIRECTLY TIED, TO A LOOSER CONNECTION
BETWEEN PERFORMANCE AND PAY, AS WELL AS A BETTER UTILIZATION OF VARIABLE COMPENSATION TO RECOGNISE
PERFORMANCE.

VIDEO CLIP
• REINVENTING PERFORMANCE MANAGEMENT AT
DELOITTE (HBR)
• HTTPS://HBR.ORG/VIDEO/5122969232001/REINVE
NTING-PERFORMANCE-MANAGEMENT

CHANGES IN
COMPENSATION
MANAGEMENT
CONSORTIUM 2018

THE EVOLUTION
OF REWARD
MANAGEMENT

COMPONENTS OF TOTAL REWARD STRATEGY

BEST PRACTICE
REWARD
MANAGEMENT
PRINCIPLES

STRATEGIC TOTAL REWARD MANAGEMENT

DIAGNOSTIC TOOLS
• REWARD MANAGEMENT: DIAGNOSIS OF BEST
PRACTICES
• HTTPS://WWW.SURVEYMONKEY.COM/R/PQWGNJJ
• STRATEGIC REWARD MANAGEMENT: DIAGNOSIS OF
PRINCIPLES
• HTTPS://WWW.SURVEYMONKEY.COM/R/PHKFGQL

•FIVE STRATEGIC REMUNERATION AND BENEFITS TRENDS THAT WILL DRIVE BUSINESS SUCCESS:
SEGMENTATION AND DIFFERENTIATION
FLEXIBILITY
HEALTH AND WELLNESS
COMMUNICATION
ANALYTICS AND DECISION-MAKING
REMUNERATION TRENDS - WILLIS TOWERS
WATSON (2016)

1. THE APPROACH TO MERIT INCREASES WILL CHANGE
2. CASH BONUSES WILL INCREASE
3. TOP PERFORMERS WILL CONTINUE TO RECEIVE LARGER SALARY INCREASES THAN AVERAGE PERFORMERS
4. THE HIRING OF “BOOMERANG” EMPLOYEES WILL CONTINUE TO RISE
5. COMPANIES WILL ADDRESS THE GENDER PAY GAP
6. MILLENNIAL REMUNERATION WILL UNDERGO PHILOSOPHY CHANGES
7. STRUCTURALLY HIGH UNEMPLOYMENT / UNDEREMPLOYMENT
8. SIMPLIFICATION
9. PERFORMANCE MANAGEMENT – REBOOT
10. COST CONTROL
REMUNERATION TRENDS – 21ST CENTURY
(BUSSIN)

ADDRESSING THE GENDER PAY GAP

MILLENNIAL
COMPENSATION
CONSORTIUM 2018

• COMPETENCY-BASED PAY IS A PAY STRUCTURE THAT REWARDS EMPLOYEES BASED ON HOW WELL THEY PERFORM IN
THE WORKPLACE, RATHER THAN THE HIERARCHY OF THEIR POSITION OR YEARS OF EXPERIENCE.
• THE BENEFITS OF COMPETENCY-BASED PAY STRUCTURES:
SERVES AS A MOTIVATIONAL TOOL
IT REINFORCES A CULTURE OF SELF-IMPROVEMENT
IT MAY IMPROVE STAFF RETENTION
IT ENCOURAGES CORPORATE TRANSPARENCY
FUNDAMENTALS OF COMPETENCY-BASED
PAY

• SKILL-BASED PAY REFERS TO A PAY SYSTEM IN WHICH PAY INCREASES ARE LINKED TO THE NUMBER OR DEPTH OF
SKILLS AN EMPLOYEE ACQUIRES AND APPLIES AND IT IS A MEANS OF DEVELOPING BROADER AND DEEPER SKILLS
AMONG THE WORKFORCE.
• SUCH INCREASES ARE IN ADDITION TO, AND NOT IN LIEU OF, GENERAL PAY INCREASES EMPLOYEES MAY RECEIVE.
• THE PAY INCREASES ARE USUALLY TIED TO THREE TYPES OF SKILLS:
HORIZONTAL SKILLS
VERTICAL SKILLS
DEPTH SKILLS
DEFINING THE SCOPE OF SKILLS-BASED PAY

• SKILL-BASED PAY IS A PERSON-BASED AND NOT A JOB-BASED, SYSTEM.
• IT REWARDS (AND THEREFORE EMPHASIZES) A BROAD RANGE OF SKILLS WHICH MAKES THE EMPLOYEE MULTI-SKILLED
AND THEREFORE FLEXIBLE.
• IT POSITIVELY ENCOURAGES SKILLS DEVELOPMENT.
• A SKILL-BASED PAY SYSTEM MAY NOT NECESSARILY REFLECT HOW WELL THE SKILL IS USED, AS THIS FALLS WITHIN THE
PERFORMANCE COMPONENT OF PAY.
• THE SYSTEM NEEDS TO BE UNDERPINNED BY OPPORTUNITIES FOR TRAINING WHICH IS CRITICAL TO THE SUCCESS OF
THE SYSTEM.
DIFFERENCE FROM TRADITIONAL PAY SYSTEMS

LIST OF SOURCES
• HTTPS://WWW.15FIVE.COM/BLOG/EMPLOYEE-PERFORMANCE-MANAGEMENT-TRENDS-2018/
• HTTPS://CLEARREVIEW.COM/5-PERFORMANCE-MANAGEMENT-TRENDS-2018/
• HTTPS://WWW2.DELOITTE.COM/GLOBAL/EN/PAGES/HUMAN-CAPITAL/ARTICLES/PERFORMANCE-MGMT-IS-BROKEN.HTML
• HTTPS://WWW.HUMANRESOURCESTODAY.COM/PERFORMANCE-MANAGEMENT/TRENDS/
• HTTPS://JEROEN-DE-FLANDER.COM/PERFORMANCE-MANAGEMENT-CYCLE/
• HTTPS://WWW.KEKA.COM/PERFORMANCE-MANAGEMENT-TRENDS-WATCH-2017/
• HTTPS://WWW.MAZARS.CO.ZA/HOME/NEWS/ARTICLES/THE-SEVEN-TRENDS-CHANGING-PERFORMANCE-MANAGEMENT
• HTTPS://WWW.MCKINSEY.COM/BUSINESS-FUNCTIONS/ORGANIZATION/OUR-INSIGHTS/AHEAD-OF-THE-CURVE-THE-FUTURE-OF-PERFORMANCE-MANAGEMENT
• HTTP://TOP-EMPLOYERS-457460.HS-SITES.COM/BLOG/KEY-TREND-IN-COMPENSATION-BENEFITS-INCREASED-DIFFERENTIATION-IN-COMPENSATION

QUESTION AND ANSWER SESSION

CONTACT DETAILS
•DR CHARLES COTTER
• (+27) 84 562 9446
• CHARLESCOT@POLKA.CO.ZA
• LINKEDIN
• TWITTER: @CHARLES_COTTER
• HTTPS://WWW.FACEBOOK.COM/CHARLESACOTTER/
• HTTP://WWW.SLIDESHARE.NET/CHARLESCOTTER

HRM Innovation in Reinventing Performance Management and Compensation

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