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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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slide1

Building a Performance Management Culture

a Black & Decker Case Study

October 27, 2009

slide2
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

slide3

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
slide5

BDHHI Core Strategies

Five “Evergreen” HR Strategies

  • Talent Acquisition
  • Employee/Organization Development
  • Winning Culture
  • Employee Communications
  • Performance Management
slide6

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
slide7

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
slide8

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
slide9

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
slide10

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
slide11

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
slide12

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
slide18

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
slide19

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)
slide21

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
slide22

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
slide23

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

slide25
“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
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