Transcript Document

Building a Performance Management Culture
a Black & Decker Case Study
October 27, 2009
Inspire Great People
 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
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
BDHHI Core Strategies
Five “Evergreen” HR Strategies
 Talent Acquisition
 Employee/Organization Development
 Winning Culture
 Employee Communications
 Performance Management
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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
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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
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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
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Cross Functional Team - Focus Areas
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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
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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
Grow Through Innovation
“Strong Organizational Culture - Winning
Culture” Values
…Yet Another Cross Functional Team Opportunity
Before (10)
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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
Great People
Deliver Operational Excellence
Alignment of Systems and Processes
Vision
Metrics &
Accountability
(Balanced
Scorecard)
Goals—
(Functional &
Individual)
Winning
Culture
Values
Strategies
HHI Core Strategies
Metrics & Accountability--Our Balanced Scorecard
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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)
Q209 Lake Forest
LF
Q1
LF
Q2
I feel safe in expressing my
opinions openly without fear of
retribution
7.23
Managers are genuinely involved
in helping people develop their
potential
LF
Q3
LF
Q4
HHI
Q1
HHI
Q2
HHI
Q3
HHI
Q4
HHI
FY
Goal
7.52
6.86
7.09
6.55
7.16
7.25
7.11
7.15
6.60
I have a good relationship with my
manager
8.01
8.12
7.60
7.63
7.24
BDHHI generally lives up to the
values of the organization, even
when times are tough
7.51
7.73
7.51
7.56
6.95
BDHHI does a good job of keeping
employees informed about matters
that affect them
8.01
7.98
8.10
8.03
7.33
How likely would you be to
recommend BDHHI to a friend or
colleague as a place to work
7.43
7.76
7.23
7.31
6.91
Deliver Operational Excellence
Talent Review Process (Succession Planning)
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Prior process was a “forms intensive, largely HR oriented” exercise
 Low linkage to talent management processes
 Little accountability for action and follow up
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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
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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
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“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
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