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
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
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
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
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)
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)
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
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