!["Another important part of instilling the Goldman Sachs culture is our
employee review process. Employees are reviewed by supervisors, co-
workers and employees they supervise in a 360-degree review process
that is integral to our team approach, and includes an evaluation of an
employee’s performance with respect to risk management, compliance
and diversity.”
Goldman Sachs, Form 10k, 2017: OMR ‘A-’
MI Banking Governance & Culture Report
Goldman Sachs:
A system for ongoing employee reviews in a diverse culture
"They [women] are able to flourish because they are given the system
to work within.”
Kate Richdale, Co-head Investment Banking, Asia, Goldman Sachs (FT 13
April 2017)](https://image.slidesharecdn.com/upgradepmmistandardwebinar1-170621123539/85/Upgrade-your-performance-management-system-to-the-MI-Standard-19-320.jpg)
Upgrade your performance management system to the MI Standard
- 1. MI Webinars Upgrade your Performance Management System to the MI Global Standard Presented by Paul Kearns, MI Chair Continuing Professional Development for MI Members
- 2. Our Objective 2 To realise the full value potential of every single person who works for, or with, an organization.
- 3. Part Topic Welcome 1 Why Performance Management isn’t working 2 Organizational Maturity is based on building a Value Management System (VMS) 3 Where are you starting from – what is your OMR? 4 Laying the foundations for a mature Performance Management System 3 Upgrade your Performance Management System to the MI Global Standard
- 4. 4 Part 1 Why isn’t Performance Management working?
- 5. Some of the many reasons why performance management isn’t working? • Disconnected from the purpose and value of the business • The culture does not encourage or support high value performance • It’s just a process, not a system • Often its objectives are mixed/unclear (selection, development, career, pay?) • Imposed – not a natural part of everday operations • Poor reviewer capabilities • Etc. etc……. • In short – organizations are currently too immature to make it work 5
- 6. Accenture CEO on performance management - 2016 • Q. Deloitte is also likely to be getting rid of such rankings. Do you expect these moves will have a ripple effect among other global companies, given many of them take cues from consulting firms? • A. Yes, I hope so. The process is too heavy, too costly for the outcome. And the outcome is not great. 6 https://www.accenture.com/gb-en/company-accenture-ceo-performance-review
- 7. “Companies that have discontinued annual reviews include Adobe, Accenture, Dell, Deloitte, Disney, Eli Lilly, The Gap, GE, Goldman Sachs, IBM, Juniper Systems, KPMG, Lear, Medtronic, Microsoft, Morgan Stanley, Motorola, Netflix, OppenheimerFunds, PwC, Sears. It’s estimated that by 2018, 75% of the US Fortune 1000 will have transitioned away from annual performance reviews.” ‘Proposal to Pilot Evidence Based Employee Performance and Development’ San Mateo County, California, 2017 Mature Performance Management has to be evidence-based
- 8. 8 https://hbr.org/2015/09/why-more-and-more-companies-are-ditching-performance-ratings Harvard Business Review, November 2015 “By early 2015, around 30 large companies, representing over 1.5 million employees, were following a similar path. No longer defining performance by a single number, these companies were emphasizing ongoing, quality conversations between managers and their teams.”
- 9. The value of the team leader 9 “Since Toyota exists to add value for its customers, and it is team members who do the value-added work, the team members are at the top of the hierarchy. The rest of the hierarchy is there to support them.” “The team leader is like an on-the-spot physician ready to jump in any time there is a problem. The team leader is also a safety valve …. watching to see if any problems are emerging.” ‘The Toyota Way’ Jeffrey K. Liker (McGraw Hill, 2004 pp. 191-2)
- 10. 10 Part 2 Organizational Maturity is based on building a Value Management System (VMS)
- 11. 11 SCALE RISKS 10 PILLARS FRAMEWORK VALUE MI Orientation – Performance Management can only produce value if it is an integral part of a total Value Management System (TSV)
- 12. Stage 2 Outmoded annual reviews Stage 3 Enforced performance management to achieve ill- conceived targets Stage 4 People recognised as integral to business operations Stage 5 Value management system at core of business strategy Stage 1 Tick box approach Board & Executive yet to understand connections between maturity, value & performance Stage 6 Organisation becomes a whole system Stage 0 No interest in professional performance management Performance Management can only be as good as the organization’s maturity level Mature culture - individuals are systemically motivated, enabled and empowered to contribute maximum value Immature environment characterised by lack of ‘system’, reactive PM and low value engagement AA- AAA BBB BBB- BB+ B- D CCC- BB BB- B B+ CCC+ CCC C CC BBB+ A- A A+ AA+ AA OMINDEX
- 13. 13 Part 3 Where are you starting from – what is your baseline OMR?
- 14. 14 Rating organizational maturity: OM30, OMRs & OMINDEX
- 15. VMS – OM30 connects mature philosophy to several systems 15 19 Never-ending, continuous improvement To what extent is the philosophy and practice of never-ending improvement embedded throughout the whole organization? 20 Quality system Does the organization have a quality system and, if so, to what extent is it applied? 21 Innovation System Does the organization have a system to measure the rate of innovation of the entire workforce (including suppliers) and, if so, to what extent is it applied? 22 Performance management system Is there a performance management system and, if so, to what extent is it applied? 23 Learning & knowledge To what extent Is this a learning organization that continuously and expeditiously aims to acquire and apply knowledge, expertise and experience to continuously create more value and reduce risk?
- 16. Rater guidance: “The system has to have a purpose that all performance leads to value and/or risk reduction; performance should be reviewed frequently and regularly at all levels; performance improvements should be monitored and communicated on a closed-loop feedback basis.” OMR Rater Guidance OM30: Question 22 - Performance Management System
- 17. Numberoforganizations Mature VMS AA- AAA BBB BBB- BB+ B- D CCC- BB BB- B B+ CCC+ CCC C CC BBB+ A- A A+ AA+ AA Conventional Performance Management OMINDEX A Mature Value Management System moves the whole organization forward
- 18. 18 Part 4 Laying the foundations for a mature Performance Management System
- 19. "Another important part of instilling the Goldman Sachs culture is our employee review process. Employees are reviewed by supervisors, co- workers and employees they supervise in a 360-degree review process that is integral to our team approach, and includes an evaluation of an employee’s performance with respect to risk management, compliance and diversity.” Goldman Sachs, Form 10k, 2017: OMR ‘A-’ MI Banking Governance & Culture Report Goldman Sachs: A system for ongoing employee reviews in a diverse culture "They [women] are able to flourish because they are given the system to work within.” Kate Richdale, Co-head Investment Banking, Asia, Goldman Sachs (FT 13 April 2017)
- 20. Defining added value for performance management 20 $ + = Increased Output (O) Reduced Cost (C) Increased Revenue (R) Increased Quality (Q)Value of business now Value of Business in 1, 2, 5, 10 years ADDED VALUE $ $ Societal value generated by producing the best quality products/services at the lowest possible cost (including any external harm e.g. environmental)
- 21. • Activity measures say nothing about value (e.g. number of sales calls) • Performance measures say nothing about value (e.g. sales volume/units sold) • Value (higher net $ value of sales) tells us the whole story – the organisation is performing better in terms of OCRQ A Mature Value Management System Distinguishes between 3 measures
- 22. How does each individual add value? 22 Revenue(R)Base$100 Margin 10.0% Cost (C) $90 Today +5% R +5% Q-5% C 14.3% 14.5% 18.6% $85.5$85.5$90 Raising Q increases R and reduces C Reducing C Raising R
- 23. MI Standard on Performance Management (summary) • A conscious journey of maturity (improving OMR) constitutes a VMS with a daily focus on value improvements • Obverse of value is risk but this cannot wait for a ‘review’ • Treat all people as valuable capital • Principle - everything that can impact on value or risk can and should be measured (especially culture) • Communicate the ‘Value Management System’ to all stakeholders • Business metrics and performance indicators to be re-defined (OCRQ) • Translate high level value measures into individual actions & behaviours • Systematic review process to check for inherently conflicting objectives • All can voice their perspective through constructive feedback at any time • All suppliers and external partners adopt the same value management system • Performance must be seen to link to TSV • All team leaders (performance reviewers) must be capable and effective • Performance reviews to incorporate all levers of learning, personal development, role analysis, career and succession planning 23
- 24. Our Objective 24 To realise the full value potential of every single person who works for, or with, an organization. The only way to measure continuing progress towards that objective is by measuring your OMR, every year.
- 25. Thank you for watching 25 For MI Orientation and Affiliate Membership please visit http://www.hrmaturity.com/ihrm- events-201314/the-maturity-institute- orientation-programme/ For the MI Standard visit http://www.hrmaturity.com/wp- content/uploads/2017/05/MI-Performance- Management-Standard.pdf