Along with this additional responsibility will come greater accountability and an opportunity to elevate the perception of HumanResources to the science it is. To make matters easier, many of the measurement tools needed by Human Resources already exist and simply await implementation. We know that C-level executives want to know more about what Human Resources is doing to support the overall performance of the organization; metrics, the right metrics, can quickly and easily show them that their statement to shareholders about the value of their employee assets is completely accurate.
This book outlines the ways, means, and actual metrics that can transform the perception of Human Resources in any organization. Not just a cost center, Human Resources is a critical player in the improvement of organizational performance when it comes to the management of Human Capital. When metrics are used as a means of measuring and improving the performance of Human Resources in the mission, objectives, and strategy of an organization, it becomes a clear contributor to the bottom line.
Case studies from top organizations complement the provided framework with solid examples of what works, what doesn't work, and how to learn from the process. If followed, the counsel of this book will give you the necessary tools to improve work, people, and performance in your organization. Introduction As if they didn't already face incredible challenges, years ago ships were unable to accurately measure their east-west position.
Getting lost was common and many ships disappeared, ran aground, or sank because they could not measure longitude. The costs in life, property, and performance were immense until , when a contest underwritten by the British crown drove the development of a solution. Human resource performance is the measurement challenge of our time and the implications are analogous to that of longitude. While organizations will quickly benefit from measuring HR correctly, it's important to understand what we've been doing wrong and why HR measurement has lagged well behind that of other organization functions.
Senior executives used to consider HR as a "soft" unavoidable cost of doing business that handled executive compensation, processed employment transactions, hosted employee functions, dealt with employee problems, and, they hoped, minimized lawsuits. Three factors changed this perception: the significant impact of high performance HR, the implications of poor performing HR, and soaring HR operating expenses.
These metrics include the ubiquitous yet meaningless ratio of HR to total employees and the common, yet invalid, cost-per-hire. HR metrics should not be exclusive to clients, and many consultants espouse too many metrics and metrics that are too complex to be of practical value.
Some consultants also exploit organizations' obsession with strategy and focus on measuring strategy, while organizations should be focusing on measuring objectives and outcomes. Before we set out to measure HR at work we must understand what metrics are and are not. Metrics are not an end in themselves, but in the end they must be calculated. Metrics are the ultimate arbitrator and should be the final judge of performance. It is important to recognize however, that not all numbers are metrics.
This is not the first substantial work on HR metrics. All of us are greatly indebted to the continuing leadership of Jac Fitz-enz, the undisputed father of HR metrics. David Ulrich has always encouraged HR measurement and incorporated metrics into his unparalleled work. Let's get to the task at hand, if for no other reason than measuring, just measuring, improves performance.
It's no longer sufficient for the Human Resources function just to drive down costs; rather it must also help the organization create value and differentiate itself from competitors. In today'seconomy, it's the human capital in organizations that will be the differentiator and ultimately decide how an organization performs. To that end, Human Resource managers play an instrumental role in helping their organizations perform by providing HR deliverables that address the human capital issues that are key to executing the business strategy.
This includes utilizing metrics to gauge the performance of deliverables and the impact they have on supporting the organization in executing its strategy. It has been well documented that in this new role, Human Resources should be positioned and designed as a strategic business partner that participates in both strategy formulation and implementation. And this requires Human Resources to be aligned with the business strategy so that the appropriate deliverables and metrics are implemented.
The prerequisites for an organization's human capital to be effectively aligned with its business strategy are further discussed in Chapter 2, A Path to Alignment, which identifies three fundamental steps. And part of the poor communication is because in many organizations the discussion still focuses on what the strategy and objectives consist of rather than how to implement them, ending up with vague and generic business objectives. Human Resource leaders can serve an important role here and establish it as a key strategic partner by facilitating how the business strategy and subsequent objectives will be implemented in their organizations.
The importance of such a linkage was greatly popularized by Larry Bossidy and Ram Charan's landmark book Execution: The Discipline of Getting Things Done, which based an organization's success on its ability to execute its business objectives.
Bossidy and Charan argue that three core processes-people, strategy, and operations-and the degree to which they are linked are at the heart of providing an organization the competitive discipline needed to execute and succeed in today's marketplace. See Figure 1. Bossidy and Charan emphasize that the people process is more important than either the strategy or operation processes, arguing that if the people process is not done right the organization will never fulfill its potential. Based on their vast experience and research with successful companies, Bossidy and Charan emphasize that getting the people process right involves integrating and linking it with business strategy and operations.
In essence, it's the first building block that links people to the strategy and operations. Bossidy and Charan argue that business leaders create this linkage by making sure they have the right kinds and numbers of people to execute the strategy. And meeting the medium and long-term milestones depends on having a pipeline of promising and promotable leaders.
Only after reviewing your human capital in regard to an ability to execute the strategy will you be able to identify the specific human capital needs that must be addressed to allow the organization to achieve its objectives. But it doesn't stop there. Human Resource professionals have an opportunity to identify specific human capital deliverables that can support the accomplishment of business objectives. For example, let's say a given company has an objective to introduce a new product line as part of its business strategy, and its subsequent review of its human capital indicates that the current talent pool and its internal pipeline are sufficient to meet this objective.
But let's say that, as HR professionals of this given company, we also know that our staff with product expertise is highly sought after, both from within the company and by external competitors. Any turnover would seriously impede the achievement of this objective. Seeing such a connection would prompt us to design incentives like bonuses or other reward programs that would encourage and retain staff until the objective is achieved.
These kinds of human capital deliverables can be identified when human capital is linked with how the business strategy and objectives are implemented. This is also evident in the pioneering work of Kaplan and Norton who, through their balanced scorecard approach, help organizations implement their business strategy and provide a way to measure the organization's progress toward achieving its goals.
The premise of their approach is to measure business performance based on how the strategy is implemented utilizing a strategy "map" rather than solely on what the strategy consists of. As in the work cited by Bossidy and Charan, Kaplan and Norton found successful organizations to have a clearly defined business strategy and human capital to be integrated with the implementation process of their strategy. The balanced scorecard is essentially a framework that provides a more balanced view of organizational performance by providing other measures than the traditional financial ones, including measures regarding internal processes, customers, and an organization's human capital.
It recognizes that people are related to improving business processes that deliver more value to customers, ultimately leading to increased revenue. By utilizing multiple measures, both financial and nonfinancial, the scorecard ensures that managers don't just rely on the limiting view of financial statements, which are inherently backward-looking, in assessing the performance of the organization. It is this balanced scorecard framework that pioneered moving beyond mere monitoring of financials, and actively engaged employees with the strategy implementation process of their organization.
By specifying the vital measures, assessing them, and regularly communicating the organization's performance on these criteria to employees, managers ensure that the entire organization participates in strategy implementation.
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Although the balanced scorecard framework identified human capital as a key performance driver in the implementation of strategy, it did not specify how to measure the specific impact these deliverables will have on organizational performance. This leads us to the next and final part for alignment-assessing the contribution of human capital deliverables in implementing the business strategy and ultimately to an organization's bottom line. HR functions continue to struggle with appropriate and meaningful measures to quantify their value, and the HR scorecard provides a measurement tool that distinguishes among the many HR deliverables and their influence in implementing the business strategy.
In the past, HR has focused primarily on operations and as such the most often utilized metrics have involved measuring processes in terms of cost, quality, and cycle time. Clearly, HR must excel at these but when HR is viewed as a strategic partner, these types of measures provide little insight into the value HR adds nor its linkage to a company's business strategy.
The HR scorecard provides the HR function with a model to measure the performance of people practices from multiple perspectives. The real challenge is for HR to produce a scorecard that contains metrics that generate value-related information so that it can measure the impact of its deliverables on the business. Outsourcing: A Perfect Example Metrics are an important factor in all aspects of an organization. A perfect example of how metrics apply to Human Resources is in outsourcing. By closely examining the metrics of outsourcing and applying these principles throughout other functions, the importance of metrics can be fully realized.
While modem outsourcing has been developing for some 50 years, there are still problems associated with many outsourced operations. Despite the best of intentions and planning, there will be times when things will go wrong. It's not always right to outsource; outsourcing doesn't always work. We have identified five imperatives that address the problems associated with outsourcing. Acting on them will optimize your outsourcing performance and eliminate the failures. Organization leaders should focus on objectives, not strategy. More and better performance metrics must be developed.
Organizations should approach all "resourcing" decisions holistically. Human Resources should assume responsibility for all human capital aspects of outsourcing. Resourcing decisions should be based on performance. Many executives make the mistake of thinking "If our strategy is clearly determined, nothing can go wrong. So many books, speeches, presentations, and consultants are focused on strategy. It's no wonder that the business world has become obsessed with that word. In the foreword to a popular business book, the authors note that they always "start with the same simple question, 'What is your strategy?
Putting strategy first will produce the same results as ready, fire, aim. The right order is: 1. Strategy has always been third; never first. And the more emphasis that is put on mission and objectives, the easier it will be to develop the strategy. He was an extraordinary military leader and the recognized architect of the Allied victory in World War IL But Marshall also believed in the importance of objectives when he was Secretary of State and architect of the rebuilding of Europe, President of the Red Cross, and Secretary of Defense.
A recipient of the Nobel Peace Prize, George Marshall was undisputedly one of the most effective leaders of the twentieth century. Although military leaders are responsible for this approach, it isn't just a military thing. We have worked with private and public organizations around the world. They include the elite and the mundane, the large and the small. Invariably, ineffective organizations do not have clear objectives. During an effectiveness engagement in Atlanta the CEO of a national professional services firm became ever more exasperated as he heard his nine direct reports articulate nine noticeably different mission statements and struggle with their own department's objectives.
Leaders of the core functions in highly profitable organizations are invariably obsessed with their objectives, but they have met with vice presidents of functions supporting them of that may talk strategy but are not able to articulate their department's objectives. The surest way to improve any organization's performance is to take the time to get the objectives right. Employees at any level that do not know and understand the purpose of the organization and its objectives will not perform effectively, and they certainly will not be able to make the best decisions about outsourcing-or anything else.
Many of us, however, are responsible for executing, and the strategy is rightfully left to us. No significant activity should be initiated without a strategy, but it is impossible to determine an effective one unless it is derived from clear, specific objectives. Here is a simple way to get to the strategy: 1. Verify or define the mission-the main purpose for which an organization exists. The mission should make sense to management, employees, and customers.
Missions are relatively long term oriented. For most businesses they should also be valid tomorrow, next month, and for at least a year. If there is some doubt about the mission, then take time to make sure everyone is on the same page. Establish objectives-the specific and measurable deliverables that are essential to fulfilling the mission.
Objectives should be customer driven if not jointly established and also clear to management, employees, and customers. Most importantly, objectives must be measurable. Now the optimum strategy-the systematic plan of action to attain specific objectives can be developed. Those who have the responsibility for executing must also have the authority to adjust or even change the strategy in response to what they experience as they work towards achieving their objectives.
We should also note that a strategy is no more than words unless the execution of the strategy includes the requisite structure, resources, processes, and procedures or tactics. Establishing the right objectives is the first responsibility of leaders. Leave the strategy to those responsible for executing.
It's a great word. No doubt a consulting firm would be using the term had not baseball already laid claim to it. Sabermetrics is the search for objective knowledge about baseball using mathematical and statistical analysis. Yes, after a century and a half, new metrics have been developed for this, the most measured of our pastimes. Performance metrics are also about the search for objective knowledge using mathematical and statistical analyses.
Baseball metrics help team management to make the best decisions about players and ultimately optimize the team's performance. While most organizations are more complex than a baseball team, a primary purpose of performance metrics is the same: to make the best resourcing decisions in order to optimize organizational performance. There are no baseball metrics for strategy, player management practices, or player engagement. Even before sabermetrics, baseball statistics have always measured performance outcomes or results, as should any organization's performance statistics.
Performance metrics should be associated with measurable objectives. You can't and shouldn't try to-measure strategy or practices or engagement. You'd think that the baseball stats that we've been using for generations have to be the best, but the data supporting sabermetrics is incredibly compelling. Michael Lewis's Moneyball: The Art of Winning an Unfair Game is a must read book for anyone involved in business or any aspect of human capital management. It's a compelling story about using these new metrics to build a championship-caliber team in the face of years of accepted scouting practices.
In spite of the data, sabermetrics have been slow to gain wide spread acceptance. In business, it's the consultants and pundits who are struggling to hold on to the most overrated and useless of conventional stats. In spite of saber-sharp data, many insist there must be meaning in the metrics because they have been around for so long. The ratio of Human Resources employees to all employees is a good example. Probably the oldest HR metric, it is based on the premise that comparing the number of HR employees to the number of total employees that they support was an indication of HR efficiency, if not performance.
A ratio of 1: was considered the standard. Like many common metrics, it may sound logical but was flawed from inception. These are the problems with any headcount-based metrics. And yet this ratio is how many organizations manage their HR function-and HR outsourcing organizations sell their services. The nature of functions like manufacturing and distribution fostered the development of meaningful metrics, but that is not the case for HR and human capital intensive operations indicators and performance.
This perspective from major consultancy Watson Wyatt Worldwide indicates how convoluted approaches to measuring human capital indicators and performance have become: many organizations have difficulty focusing on the "right" measures. They might measure a factor generally related to financial performance, but it may not be the best one considering the business and strategy.
For example, organizations know that employee turnover is related to financial performance; and since turnover data is readily available, a company might choose to measure turnover. But if the company's turnover rate is very low, it most likely does not strongly affect the business performance. This suggests that a metric is important only if the data it measures is poor.
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If a metric is valid, it is always valid regardless of what the answer is. If turnover was a valid metric and the turnover was very low, it still should be measured. If a team measures batting averages and runs batted in, they do it regardless of whether or not the results are good or bad. Incidentally, there are many documented cases of organizations with very low turnover that significantly and adversely affected business performance. Low turnover can be a bad thing. Retaining the wrong employees, fostering complacency, or enabling a culture that drives out change agents and high performers may result in low turnover but is deleterious to any organization.
Regardless, metrics associated with turnover and cost-per-hire are as meaningless a human capital metric as the win-loss record is for pitchers. Retention-retaining the staff you want to keep-and recruiting efficiency are far better HR metrics for organizations to monitor. Although it is often difficult to evaluate the impact of outsourcing operations because of the lack of a "before" benchmark, outsourced operations tend to be measured more than those that are not.
This is because after an organization outsources work, they are more apt to ask, "What is it costing us now and what do we get for our money? The only consistent difference between the two is that the best performers aggressively measure and report their own performance. There is need for more and better performance metrics in every category of outsourcing but it is particularly great for human capital intensive operations.
Under the auspices of Staffing. These organizations are taking a leadership role in developing critical approaches and metrics for all organizations. The critical functions performed by the personnel department were highly process oriented and involved, for the most part, management of employee paperwork. This responsibility included oversight of a range of processes that span the entire lifecycle of an individual's employment with the company, such as the creation of job requisitions, recruitment of new hires, tracking of job applicants, orientation of new hires, management of the benefits program, performance tracking, tracking of compensation, dealing with grievances, and employee exit processing.
This is just a partial list of the processes historically managed through the personnel department. The emphasis was generally on the creation and management of documentation. Every step along the path from hiring to termination needed to be carefully documented, and this huge mountain of documentation needed to be organized, filed, and tracked. In the age before modem information technology, this cataloging and tracking by itself was a daunting task. As corporations grew more complex, jobs more complicated and specialized, the personnel department continued to fill many roles and those working within the function often wore many hats.
Other functional groups such as Finance and Accounting became more and more focused within their specialty, while at the same time the personnel department, having adopted the moniker of Human Resources, took on ever more diverse tasks.
A telling example is the role of the Information Technology IT department. One of the most significant shifts in technology measured by its impact and ubiquity has been the introduction of computers to the business organization. One of the most important early uses for computers was in the Accounting and Finance functions, and because of this, most companies put their fledgling IT departments under Finance and Accounting.
Over time these departments took on ownership of other functions and assets with the organization such as communications systems and so forth. Back in the s it became obvious to most that the IT group should be independent of Accounting and Finance and that managing this function from within Finance and Accounting was preventing those groups from focusing on their prime tasks. Meanwhile, the Human Resources function took on more and more responsibility in a range of areas related to employees.
As a result of this, Human Resources today covers a huge range of functions from those related to talent management such as recruiting, staffing, training, leadership development, and retention as well as managing benefits, employee engagement, wellness benefits, employee legal issue management, and many others. In the past, the role of the Human Resources department and the professionals within it has been limited to fulfillment and implementation. Those working within these groups were seen as "personnel specialists.
However, as of today, few CEOs would say that their Human Resources departments were truly strategic. Given the somewhat schizophrenic set of functions that the department is tasked with, this conclusion is not surprising. John W. We have well developed strategic planning, marketing, operations, and budgeting processes that connect deeply and logically with our understanding of how to create competitive success and shareholder value. Yet, at best these core processes reflect only general talent goals like headcount, labor costs, or generic Human Resources programs.
At worst, people issues don't even appear except as a headcount budget at the end of the plan. Yet, these Human Resources measurements seldom drive key business decisions such as acquisitions and entry into new markets. Moreover, our investors can't rely on these measures to show them the competitive value of our talent. Can talent measures truly drive business decisions and investments?
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Yet, our Human Resources strategy discussions typically focus on: 1 What Human Resources programs will we offer; 2 Should Human Resources be centralized or decentralized; 3 What IT and other infrastructure is needed to make it all work; and 4 Why it is so hard to justify the investment? Why is respect for Human Resources as a whole less than the respect for Human Resources individual contributors?
Yet, Finance, Marketing, and Engineering routinely produce this kind of leader. In Human Resources, they are a precious few, and each has their own unique approach. Why can't we more reliably create this kind of leadership excellence across our entire group of Human Resources professionals? Studying these perspectives, it is apparent that there is a significant mismatch between where Human Resources is today and where senior executives expect it to be.
One significant item that comes up again and again is that of justification. Human Resources spends a significant portion of its time in justifying why the company should be making the investments in Human Resources related programs that are being touted. Constantly being in the position of justifying their very existence, Human Resources executives find themselves in a defensive posture. While most firms find their Finance function strategic and never consider outsourcing it, many firms are looking at the idea of significantly, or even completely, outsourcing the Human Resource function.
In a recent survey by the Human Resources Metrics Consortium, the inability to document Human Resources and Human Capital performance was the primary reason for terminating Human Resources professionals. Given the microscope that the Human Resources department often finds itself under from a cost perspective, it is instructive to keep in mind that, for most organizations, the entire cost of Human Resources that is not related to employee benefits is typically around 2 percent of revenues.
This is a very small chunk of the bottom line. Reducing costs in the Human Resources department by 10 percent a significant change in costs would bring this to 1. The point here is that there is not a great deal of leverage to be had in looking at cost reduction in the Human Resources department. A far better approach would involve looking at how Human Resources as a function can have a greater impact on the organization. For example, the ability to track and understand the issues related to employee retention in a large, low technology services firm can have a huge effect on the bottom line.
How can we determine if an organization's Human Resources department is aligned with the strategic goals arid mission of the organization? This seems like a fairly straightforward question, one that must have undoubtedly been answered or at least asked repeatedly. As it turns out, this is an area of significant frustration! As a function within an organization, getting to the core involves: 1 a statement of what we are, 2 a definition of alignment, and 3 a system for determining the current level of alignment.
Unfortunately, this is an area where concrete measures and models are not readily available, yet many organizations seem to be very successful at determining if particular functions within the organization are well aligned with the company's overall strategy or not. When questioned on measuring strategic alignment, many top executives will state that they can see when something is aligned and when it is not. In a very simplified view of strategic development, there are two stages: planning and implementation.
No strategy is complete without these two elements. So if the Finance department spends most of its efforts on tasks that are generally considered well aligned with the organization's strategic mission and Human Resources does not at least in the opinion of most C-level executives in Fortune companies , how can Human Resources look more like Finance, at least from the perspective of demonstrating strategic alignment?
Let's start by examining how the Finance department demonstrates alignment. Even before we get started on that, there needs to be an agreement on what strategic alignment means. Demonstrating Alignment Of interest in this context is the ability to demonstrate alignment with key corporate strategic objectives; such a demonstration of alignment requires three fundamental factors: 1. An understanding of the corporate strategic goals themselves. These will be unique to each organization.
If well-conceived and articulated, corporate goals are the shorthand description of the path to success for the firm. A set of hypotheses that describe how Human Capital relates and how it can impact corporate goals. This requires a firm understanding of the role of Human Capital and the ability to develop plausible causal effect models that trace the route of the potential impacts through a chain of effects.
For example, consider a cell phone service provider with a corporate goal of creating ultimate differentiation through the best customer service in the industry.
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There are many ways that employees play into positive customer service, one of which is training. A potential hypothesis is that better and more extensive training of customer service representatives will positively impact customer service ratings. Additional training will have a cost associated with it but should yield superior customer service. Matching these up in as quantitative an approach as possible is the heart of the modeling approach that will be discussed. A clear, predefined p Ian for showing, in as concrete terms as possible and appropriate , what the impacts and changes have been.
This book will provide you with the tools and methodologies to tackle the second and third items above. The model develops concepts such as expected realizable value of an employee and an organization service state matrix-concepts that are best reviewed during a semester in graduate school, not in this book. However, we can grasp the essence of the Stochastic Rewards Valuation Model. It looks at the return an employee generates through that person's entire career for example, from retail shop assistant to assistant manager to store manager , taking into account the probability of promotion and the probability of turnover.
For example, shop assistants will, on average, generate a certain return to the company. The chances that they will be promoted to a more valuable position or quit can also be estimated. So with a little math the value an average employee will return over, say, a ten-year period can be estimated. This is the best the field of Human Resource Accounting provides, but it is hard to imagine a firm using this except in unusual situations.
It requires too much data that is not readily available.
Human Resource Accounting has not made the transition from academia to practice because, to date, it has not produced methods of everyday usefulness to firms. CHAPTER 3 Supporting Human Capital Decision Making If you are reading this book, then you are likely aware that the use of metrics in human capital management has been receiving a good deal of attention recently in a variety of forums.
Many in Human Resources are ready to jump on the metrics bandwagon and are looking for specific directions on how to begin. Getting started with any new initiative can be a daunting task. The development of a metrics approach is seen as finding the best human capital related metrics the what to measure and deciding which measurement and analysis techniques to use the how , as well as the methodology for interpretation what does it mean , followed by making recommendations for appropriate action what to do about it.
With such a broad cut, the goal of developing an all encompassing metrics plan is the kind of project that can easily be measured in person years. We have left out the most important dimension in terms of defining a metrics strategy: the why. Metrics should not be gathered, analyzed, and repotted on for the sake of doing so.
There needs to be an underlying motivation. Looking across the various disciplines that define most of the functional areas in modem business organizations, the underlying motivation for gathering data, analyzing, reporting on trends, and making recommendations, relates to decision support. Frequently the individuals or department responsible for providing decision support are not the same individuals making the actual decisions.
Boudreau and Ramstad have drawn a powerful analogy between where Human Resources is today in terms of human capital analytics and where Finance was 50 years ago in terms of analyzing accounting related data. In an oversimplification, accounting can be described as the function charged with the recording and reporting of all the financially related transactions that occur between an organization, its partners, customers, employees, and so on. These numbers can then be aggregated and reported on in literally millions of different ways.
FASB or any other agency dictates exactly how the accounting numbers should be interpreted in any given situation and how that interpretation should drive financially related business decisions. This is a critical point of comparison. Accounting can produce a myriad of metrics, but without some guiding framework, or as Boudreau and his colleagues have succinctly put it, "a decision science," drawing any reasonable conclusions from this sea of numbers is nearly impossible. In the maturing discipline of Accounting and Scientific Financial Management, it does not make sense to ask, "What makes a good accounting number?
Modem finance as a decision science has evolved considerably in just the last five or so decades and grew out of the need to make sense of the numbers that were being generated from the accounting process. It is important to understand the distinction between the roles of making decisions and supporting those who make the decisions. In the end, the quality of any decision support system, and the underlying metrics and analytics that it encompasses, is best measured by the quality of the supported decisions.
In the case of more fluid questions that discuss soft skills, combat the potential for subjective bias by having reviewers explain their reasoning and provide specific examples. This leads us to another way of mitigating bias: using multiple perspectives. You can also ask for employees to share their experience of the review process to allow any concerns about bias to be voiced. Something almost every company agrees on is that annual performance reviews are just too infrequent, so holding them every six months or quarterly could be a good place to start.
On that note, try to schedule salary talks a few weeks after reviews: development should take centre-stage in the review talks period. Next, you want to make sure the review cycles are transparent and structured. Make sure that employees know how the review cycle will work, and what the purpose of each stage will be.
Ask them to prepare their own performance data before you meet with them! Of course, the same goes for you. Organise your performance data as you go with the help of a review tool so that everything ends up in one place. Review tools can also help you be more objective in your assessments. Make use of multi-directional reviews. Having peers, managers and employees review each other - and themselves! Then, when it comes round to holding performance review talks, look at them as a unique opportunity to get to know and develop your employees.
Ask your employees about their thoughts, misgivings and aspirations: work together to create goals and OKRs that work for both them and the company vision. Equally, treat the review process with respect and sensitivity. Finally, support your review cycles with a broader culture of continuous feedback and learning.
To learn more about building a feedback culture at work, check out our feedback eBook! Read our reviews how-to blog post! One of the first things traditional performance reviews get wrong is their focus on judgment, not development. Does that sound like an ideal working environment to you? Employees who feel secure enough in their work lives to make creative choices and express their ideas are more engaged and productive than employees who work in constant fear of being exposed.
And you know what often makes employees feel exposed? But you can remedy that fear and encourage growth by changing the dynamics of your performance review. Ask employees how they want to grow; make a plan to realise those aspirations. By doing this you can motivate employees to reach their goals and take ownership of their development.
Read our development-focused blog post! And as the names imply, people with a growth mindset progress more than those with a fixed mindset - even if the fixed mindset people got a head start. As with meetings, a good review talk sees managers actively listening to their employees, not just offloading a barrage of information. Both in person and on paper, asking intelligent questions is the key to gaining valuable insight. In addition to these, you could get more quantitative data by asking participants to place their answer on a scale from This can be a really good way to get tangible insights on soft skills that might otherwise be difficult to compare.
Earlier on we spoke about the importance of placing development over compensation, as it makes the performance review more about progress than reward. But while some companies have decided to ditch salary talks completely, others might prefer to keep them. So start by setting up a timeline for salary talks. Can you separate them from your performance reviews? Click here to upload yours. Sign in.
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