Building a Performance Management Culture
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Building a Performance Management Culture a Black & Decker Case Study October 27, 2009. Black & Decker Overview Five “Evergreen” HR Strategies HHI Case Study Performance Appraisal Process Strong Organizational Culture - “Winning Culture Values” Alignment of Systems & Processes

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Building a Performance Management Culture

a Black & Decker Case Study

October 27, 2009

Black & Decker Overview

Five “Evergreen” HR Strategies

HHI Case Study

Performance Appraisal Process

Strong Organizational Culture - “Winning Culture Values”

Alignment of Systems & Processes

Differentiating Performance & Rewards

Talent Review Process

Employee Communication

Additional Performance Management Tactics

Lessons Learned

Inspire Great People

Grow Through Innovation

Black & Decker

  • Founded in 1910 and based in Towson, MD

  • World’s largest producer of power tools & accessories, security hardware, plumbing products & fastening systems

  • 2009 revenues (est.) of $5B; 20,000 employees

  • Manufacture in 12 countries and sell in over 100 countries

  • Hardware & Home Improvement (HHI) division based in Lake Forest, CA

    • Revenues of $800M, 3,500 employees in U.S., Canada, Mexico and China

    • Brands include Price Pfister, Kwikset, Weiser, Baldwin and K2

Black decker

Strong Brand Names

Black & Decker

BDHHI Core Strategies

Five “Evergreen” HR Strategies

  • Talent Acquisition

  • Employee/Organization Development

  • Winning Culture

  • Employee Communications

  • Performance Management

Inspire Great People

HHI Performance Management - 2006 Case Study

  • Annual Development Plan - ADP (Performance Appraisal)

    • 10 Winning Culture Values worth 20/15/10% of overall score depending on organizational level (Dir., Mgr., Indiv. Contrib.)

    • Goals made up the balance of overall score - up to 25 goals!

    • ADPs (ostensibly) completed in Q1 each year

    • No periodic progress reviews during the year

    • Low accountability for completing ADP process

    • No linkage to other business processes or alignment with a “performance management” calendar

    • Excel spreadsheet based process

Grow Through Innovation

HHI Performance Management - 2006 Case Study

  • “Merit” increases granted on a rolling 13 month basis

  • Not a strong commitment to a “Pay for Performance” culture - merits, annual bonuses and equity grants

  • Low level of organizational alignment

    • No Vision Statement

    • Strategic planning process was secret; no group level strategies

    • Strategies poorly communicated and not well understood

    • Up to 32 annual goals/metrics—results weren’t reviewed regularly by Leadership Team and little accountability

  • The Result: Siloed functional organizations - low alignment among Vision, Strategies, Functional & Individual Goals, Performance and Accountability

Accelerate Global Growth

“Change Creates Opportunity!”

  • Created a cross functional team in 1/06

    • Direct reports to Leadership Team members

  • Advantages of this approach:

    • Greater diversity of backgrounds, ideas and participation created improved results

    • Performance appraisal process is enterprise-wide; required participation by employees who are knowledgeable of the process from all functional disciplines

    • Empowered a team to make improvements to an important core business process

    • Involvement in revising the process increased acceptance and support for the changes

Deliver Operational Excellence

Goals of a Performance Appraisal Process

  • Set goals and measure results

  • Assess and improve performance

  • Create development plans and enhance skills

  • Career development

  • Help evaluate potential for promotion

  • Change/reward appropriate behaviors

  • Align with company’s vision/values/strategies/goals

  • Differentiate levels of performance and rewards

  • Strengthen a “Pay for Performance” culture

Inspire Great People

Cross Functional Team - Focus Areas

  • Role of Winning Culture Values

  • Competencies

  • Rating scale & descriptors

  • IDP/career pathing

  • 360s

  • Forced ranking calibration

  • Design of the “form” and instructions

  • Web enabling the process

  • Communication

  • Training

BDHHI Core Strategies

The Solution

  • Nine month project from team formation to deployment of a web-based solution

  • Launched tool in 10/06 for 2006 performance appraisal and 2007 goal deployment

  • Reduced Winning Culture Values from 10 to 4 and rated them on a “pass/fail” basis

  • Competencies introduced—6 for individual contributors and a 7th for associates with direct reports

    • 50% of overall rating

  • Goals reduced to 5--8 maximum

    • 50% of overall rating

  • Five point rating scale initially introduced and later changed to 4 point to align across all of BDK

Inspire Great People

The Solution (cont’d.)

  • IDP requirement added and linked to BDHHIU courses

  • Online 360s - employees rated on Winning Culture values and competencies

  • Forced ranking/guided distribution done initially but later moved to Talent Review process

  • All training and communication done during Q406

  • Strong support from top management was key - process accountability now delivers 99% plus completion rate

  • Tool has been adopted across BDK

Strong organizational culture winning culture values

Grow Through Innovation

“Strong Organizational Culture - Winning Culture” Values

…Yet Another Cross Functional Team Opportunity

Before (10)

  • Achieving Commitments

  • Great People

  • Raise the Bar

  • Focus

  • Boundarylessness

  • Attitude

  • High Energy

  • Urgency

  • Risk Taking

  • Impact vs. Activity

After (4)

  • Demonstrate Unyielding Integrity

  • Inspire Excellence

  • Deliver on Commitments

  • Win Through Teamwork

Alignment of systems and processes

Deliver Operational Excellence

Alignment of Systems and Processes

Inspire Great People

Differentiating Performance and Rewards

  • Merit increases - use a matrix of recommended increase %s based on performance appraisal scores

  • Annual Incentive Plan (AIP) - metric is operating income factored by working capital charge

    • Brands tied to their own results

    • GMs have 75/25 split to drive line of sight alignment

    • Support staff tied to division results

    • Personal Performance Factor (PPF) as a second level calculation to leverage bonus from 0 - 150% of actual; range of differentiation is typically 75 - 125%

  • Equity—annual grant is tied to PPF with wide differentiation

  • All Rewards recommendations reviewed by President & VPHR

    • We “rack and stack” and give feedback to Leadership Team

Grow Through Innovation

Organization Assessment Process (OAS)

  • Online employee survey conducted every 2-3 years

    • Up to 95% response rate

    • HR is process gatekeeper

    • Focus groups make recommendations to management—accept/modify/reject

    • Follow up action items owned by functional executives

    • Quarterly report out to President and VPHR to ensure process accountability and continuous improvement

  • Quarterly “pulse” surveys (6 questions) done in the interim—started in Q1, 2008

    • 50 - 75% response rate

    • Corrective action taken here as well

    • Results are published to employees via HHIOne (intranet)

Deliver Operational Excellence

Talent Review Process (Succession Planning)

  • Prior process was a “forms intensive, largely HR oriented” exercise

    • Low linkage to talent management processes

    • Little accountability for action and follow up

  • Process was reengineered

    • Number of templates reduced, fewer metrics and rich dialogue ensued

    • Discussion is now focused around “A” positions, organizational gaps, hipos/retention and employee development

    • Action items are followed up on

  • Core business process involving a 4 step, upwardly cascading process:

    • Functional Talent Review

    • Cross Functional Talent Review

    • Commercial Talent Review (Sales & Marketing)

    • Talent Review with Chairman and SVPHR

  • “Four panel” feedback is shared with all participants

Accelerate Global Growth

Employee Communication

  • Strategy driven by Director of Employee Communication

  • Communication philosophy is completely open and transparent

    • “Frequently, redundantly and using a wide variety of media”

  • Intranet (“HHIOne”) as employee portal

  • President visits all locations for Town Hall meetings annually

  • HHI-wide communications meeting every 2 months

  • Anonymous “OneTeam” questions

  • President conducts skip level meetings with direct reports to functional leaders

  • 1-800 Ethics Hotline (SOX requirement)

  • Pulse surveys and focus groups

  • Quarterly site newsletters

  • Launching digital signage

BDHHI Core Strategies

Additional Performance Management Tactics

  • Outside psychologist worked with LT and several functional leaders to build high performing teams

  • Built strong organizational culture

  • Quarterly biz reviews with LT of the 4 brands

  • Quarterly biz reviews with Chairman and CFO

  • Ops reviews in every functional support area

  • Use of self-assessments (Insights Discovery) as foundation for development plans

  • Extensive use of cross functional teams

  • Associates now “live” our Winning Culture Values…the foundation for everything we do

Inspire great people
Inspire Great People

Recognized in 2008/2009 as one of Orange County’s best places to work . . . .

2008 & 2009 2009

“Lessons Learned”

  • As always, top management support is critical

  • Must take an integrated, systems approach to effective employee management processes

  • Initiatives must be aligned with the business’ “operating rhythm”

  • Business is dynamic and your processes need to evolve

  • Solicit regular feedback from your customers

  • “Cultural change is a “team sport”

    • “The smart person uses all the help s(he) can get

    • Involve others cross functionally

  • Remember: The only sustainable competitive advantage is your talent…it must be well led, valued and empowered to make a difference