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Dialogue aligns performance with goals, says Hay Group

PERFORMANCE MANAGEMENT

Dialogue aligns performance with goals, says Hay Group

A "culture of dialogue" is at the heart of the performance management process. "It enables managers to cross the 'synapses' in organisations where messages get blocked or distorted," according to new research by consultants the Hay Group.

Unfortunately, developing a culture of dialogue does not happen instantly: it takes practice, persistence and hard work, says Hay. "When companies get it right - when they have the systems in place to create a culture of dialogue - research shows that they increase revenues, shareholder value, interest from institutional investors and employee satisfaction. The good news is that the sub-par performance caused by poor execution is fixable. And it must be fixed."

For Hay, there are three keys to managing performance: gaining clarity of goals discussing ways to accomplish those goals and following through to make sure "behaviours" are aligned with desired outcomes. "We list these three items separately but they are, of course, interconnected. Systems and processes depend on clarity from the top of an organisation or the head of a department. Differentiation and alignment of rewards depend on managers using performance systems effectively. Dialogue is the glue that holds it all together. But not just any dialogue will do. It must be dialogue with purpose, focused on performance."

Hay Group's three keys to performance management

1. Achieve radical clarity around goals

Many organisations think they send clear signals, but sadly this is not always the case.

  • There should be a manageable number of priorities - as few as five. This is true for the organisation as a whole, and for each department, team and individual.
  • Gaining buy-in is essential to effective execution, and "dialogue is what makes it happen".

"Organisational clarity measures the extent to which employees understand what is expected of them and how those expectations connect with the organisation's larger goals." - Hay Group.

2. Establish systems and processes to create clarity

"Good execution only happens when employee behaviour is aligned with goals," says Hay. Part of the solution to this problem is creating processes that "force performance dialogue". These include:

  • budget and planning sessions
  • staff and team meetings to discuss goals
  • performance management meetings
  • talent review sessions.

"Once goals are clear, organisations must create processes to ensure that people get the right messages." - Hay Group.

3. Make rewards count

Almost everywhere managers distribute rewards more or less evenly, says Hay. "Lack of effective performance dialogue is a key contributor to dysfunctional reward schemes."

  • Rewards have to be aligned with goals
  • Well differentiated rewards based on performance lead to better execution of goals
  • If little money is available for the merit pot, find new ways to link reward to "behaviours" - for example offer high performers extra training and development opportunities, or clearer lines of promotion.

"Leaders must make sure rewards encourage behaviours consistent with goals, which sounds easy but isn't. Differentiation is about making sure the stars get significantly more than poor performers." - Hay Group.

 

A final word

"There is an important difference between companies that successfully align behavior with goals and those that do not. Companies that execute effectively create a 'culture of dialogue'. A culture of dialogue encourages pervasive two-way communications where individuals and groups 1) question, challenge, interpret and ultimately clarify goals and 2) engage in regular performance dialogue to monitor behavior and ensure it is aligned with goals." - Hay Group.

Want to know more?

Title: Managing Performance: Achieving outstanding performance through a "culture of dialogue", Hay Group.

Availability: You can download a copy of the report, free of charge, in PDF format. Visit the Hay Group web site and click on the "Online library" . . .

www.haygroup.com

Posted 1 May 2002