I had the pleasure of spending Tuesday at the New York Athletic Club. No, I didn’t get to try out the racquetball courts, exercise equipment, billiards room, sauna or the sun deck that sits atop the beautiful 24-floor facility. Rather, I made the 90-minute train ride from Philadelphia to attend the 2012 Human Capital Leadership Forum being held at the historic venue.
Throughout the day, the 240 HR professionals, consultants and vendors on hand took in a variety of panel discussions and presentations that delved into the transforming role of today’s HR leader, how HR executives can incorporate business analytics and business intelligence into their day-to-day functions, identify and develop future leaders, align the organization’s workforce with future business goals and more.
A presentation of particular interest to me was delivered by Caroline Stockdale, senior vice president of human resources with Medtronic Inc., a Minneapolis-based developer and manufacturer of medical device technology and therapies. In the early afternoon session, “Innovating to Transform the Employee Experience and Accelerate Growth,” Stockdale shared “some highlights of the HR journey” she’s embarked on since joining the organization in 2010.
In that time, Stockdale has been at the center of an effort to build an innovative HR department, where “bold new ideas and approaches to traditional HR processes and systems are not only encouraged, but expected,” she said.
One of the brash ideas her HR organization has implemented is the abolishment of the organization’s old rating-based performance management system, she said.
In the past, for example, annual performance reviews were administered to Medtronic employees in each business unit, each of whom was rated on a 1-to-5 scale. The problem with such a system, however, is that “all teams are not created equal,” she says. Thus, using the same scale to rate individuals across functions is at least somewhat flawed and unfair.
For instance, a high performer on a low-performing team may earn a ‘5’ based on individual performance in comparison to their peers, while a worker in a more critical, higher-performing unit may ultimately bring more to the organization overall, but only receives a ’3′. Or, for those who favor sports analogies, think of it somewhat like trying to accurately measure the worth of a “good” baseball player in the big leagues against that of a player considered a “superstar” at the minor-league level.
Ultimately, Medtronic has moved away from competitive assessments toward providing performance feedback, coaching and development to employees on a more regular basis, as opposed to the more “traditional” annual review process.
At lunch that afternoon, I asked the gentleman seated next to me – a senior vice president of HR at a large asset management company – what he thought of Stockdale’s talk. As we tucked into our tortellini, he mentioned that his firm’s leadership had “been kicking around the idea” of scrapping its current performance management system — which he described as being similar to Medtronic’s old method – and adopting a simpler approach that involves managers offering more frequent input to employees regarding their performance, and sets realistic goals that are more directly tied to business results.
He was quick to note, though, that his organization is still grappling with just how it plans to implement a new and improved performance management system.
It probably does, if you read our July/August 2012 cover story, “There’s Got to Be a Better Way.” In that feature, Senior Editor Andy McIlvaine discussed the “needless complexity” of performance management at many organizations.
“Experts … agree that performance management – as it exists today in too many organizations – is broken,” he wrote. “Fixing it … involves going back to the basics: setting business-linked goals that are challenging yet achievable, teaching managers how to give feedback that is helpful and not demeaning, and supporting it all with a process that is intuitive rather than complicated. None of this, [experts] admit, will necessarily be easy to implement.”
True enough. But judging from the Leadership Forum audience’s enthusiastic response to Stockdale’s story of HR innovation in the performance management arena, there seems to be plenty of HR leaders with a keen interest in taking on the challenge.
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