hard and - Hay Group Focus

Connecting the
hard and
soft
Creating the high
performing organization
The economic crisis has forced many executives to take tough decisions often
resulting in radical cost cutting at all levels of their organization. But now, as markets
start to show signs of recovery, what will these actions mean in terms of managing
the performance of the business and employees? >>
Making the connection between
business goals and work
In conversations with CEOs, we often hear the refrain ‘we came
up with a good plan and communicated it very clearly – but it
is not being carried out. Why?’
One reason is poor performance management resulting in poor
organizational performance. What is happening at the frontline
isn’t what is necessarily needed to deliver the business results asked
©2013 Hay Group. All rights reserved
for by the CEO. What has been ‘communicated’ has not always
been as clearly understood. There is a disconnect between strategy
and goals at a company level, and how these are translated into
targets at a team or individual level.
Our experience from working with clients to create high
performing organizations reveals the same tell-tale signs about
what is not working. In the majority of cases there is a gap
between employee work and how that performance is managed
and the impact on achieving business goals.
2 Connecting the hard and soft: Creating the high performing organization
The hard and the soft of
performance management
Developing a
performance
management model will
help business leaders
dramaticallly reduce
financial loss from
employee activity not
being correctly aligned
with the business goals
Strategic performance management makes the
connection between the ‘hard’ – the business
goals, the strategy – and the ‘soft’ – employee
motivation and culture – of performance
management. It links the strategy and the
culture of an organization and managers’
ability to improve employees’ performance.
Employees want to do the ‘right’ thing, but they
can only do so if they know what the right things
are and receive regular feedback about their work,
and if their rewards are aligned – and understand
the impact on delivering the business strategy.
By successfully connecting these three elements:
people, strategy and culture, CEOs can improve
their business results, enhance employee
productivity and increase the likelihood
of achieving their business objectives.
What really gets in the way?
Over the years much time and effort has
been invested to implement performance
management ‘best practices’ as a way to
ensure competitive advantage. Yet, for
many organizations, it still fails to deliver
superior performance.
The famous ‘balanced scorecard’ generates
a lot of data that managers often have difficulty
translating into actions that produce the
desired business results. Furthermore, they
are concerned about giving feedback that
might demoralize hard working employees
or worse cause them to leave. Often, there is
little regular communication between managers
and employees – no ‘culture of dialogue’.
Reward decisions are based on complex
processes to translate performance into
reward strategies that deliver the wrong
results. And despite big investment to train
managers in the processes, procedures and
behaviors needed to implement effective
performance management systems, employees
complain that their performance systems
are too complicated, too technical and
not transparent about how individual
performance helps deliver corporate goals.
©2013 Hay Group. All rights reserved
Strategic performance management therefore,
is more than just a target setting process or
enhancing leaders’ capability to give feedback:
it is about aligning company strategy to team
and individual goals and rewards, and ensuring
the whole organisation is pulling together in
the right direction.
The missing link – developing
a new performance model
The missing link is the performance model.
It provides guiding principles for the entire
set of performance management beliefs, systems
and processes for the business as a whole.
A performance model helps to clearly define
principles from a strategic and cultural context.
By generating transparency across the
organization on what the goals are and how
they can best be achieved in the current culture,
it creates enormous power and motivation.
To develop a strategic performance model,
executives need to ask themselves how they
actually want to manage performance in
their organization:
What are the key levers in my
business model to drive organizational
performance?
When looking at strategic targets –
what are the key metrics to apply in
the measuring systems?
Who is in charge of making it happen?
What is the accountability of line
management?
What is my reward philosophy around
differentiating different performance
levels?
How do I reward the performance
of my best people in terms of career
opportunities?
How do I deal with low performance –
not just in how that feedback is given
but what I need to do about how it is
addressed?
3
Whether your organization is looking to
grow its revenue or its profits, a powerful
performance model will outline what
elements in the organization need to change
to achieve the desired growth. Once an
organization sets what it believes are clearly
differentiated levels of performance, it should
stick to this philosophy, even when there
are challenges. Otherwise motivation of
the best people could drop and impact
the overall performance of the organization.
While defining your performance model:
watch out. Often the biggest barriers
and enablers to creating the performing
organization are the cultural factors –
something most CEOs delegate to the HR
department to resolve. This will not work.
The key issues often arise from the way business
decisions are taken. Line managers must be
involved to identify cultural issues that affect
business decisions. For example, if we take the
classical planning dilemma between sales and
operations. Regardless of a clearly developed
process, discussions often end with the more
powerful party winning the conflict – which
may not necessarily be best for the business.
The strategic performance management model
Starting point
Outcomes
Strategic context
Strategic intent
Business model
Operating model
Culture
n
n
n
“
rganization
O
purpose and
meaning
otives and
M
values of
individuals
Performance
model
Performance
management
approach
n
Planning
Purpose
n
Coaching
Philosophy
n
Reviewing
Principles
n
Rewarding
Key metrics
n
Leadership
n
Promotion
n
Succession
Business
performance
Aligned metrics
ROI on rewards
Employee
engagement
Employee
enablement
Climate
elationships
R
and networks
Strategic performance management makes the
connection between the strategy and culture of an
organization and its ability to manage employees’
performance to better impact on business performance.
”
4 Connecting the hard and soft: Creating the high performing organization
What is Hay Group’s solution to address these issues?
Executives should be
asking themselves
if they still have the
same performance
management system as
they did five years ago
Hay Group approaches these issues in a holistic way, demonstrating sound understanding
of the business, the organization and the people. It is only through connecting individual and
team performance and creating a culture of high performance that is aligned with the business
strategy that performance management systems and processes can be designed in a sustainable
manner to improve performance.
For organizations driving for organizational performance improvements, we have clear
competitive advantage to help them get there:
We create a performance model that aligns with your organization’s specific strategic
drivers and your organization’s specific culture
We do not merely copy ‘best practice’ (which in reality is typically ‘common practice’)
but develop a tailored solution for each client
We use both ‘hard’ and ‘soft’ measures to measure results and improve business
performance. This holistic approach ensures that a performance mindset is embedded
in your organization and sustainable for the long-term
We hardwire performance management to your organization’s strategic objectives,
critical success factors and KPIs – but we don’t stop there. We also link performance
management to an organization’s culture
We help organizations not only identify and breakdown the cultural barriers that
hinder business performance, but build on the cultural strengths that help to make
each organization unique
We understand how the World’s Most Admired Companies operate and why they
are successful
About Hay Group
Hay Group is a global management consulting firm that works
with leaders to transform strategy into reality. We develop talent,
organize people to be more effective and motivate them to
perform at their best. Our focus is on making change happen and
helping people and organizations realize their potential.
The Hay Group global R&D centre for
strategy execution
Based in Singapore, Hay Group has established a global R&D
centre for strategy execution which researches best practices in
strategy execution globally.
.
Contact: [email protected]
For more information about how Hay Group can help, contact:
EME: [email protected]
Africa:
[email protected]
North America: [email protected]
South America: [email protected]
Asia Pacific: @haygroup.com
www.haygroup.com/
©2013 Hay Group. All rights reserved