The Future of Performance Management In An Era Of Uncertainty American Airlines Michelle Collins Rodrigues

THE FUTURE OF PERFORMANCE MANAGEMENT IN AN ERA OF UNCERTAINTY

March 27, 2012 1

About American Airlines

Our People – ~ 70,000 employees – ~ 60,000 non-management – ~ 10,000 management/specialist

Our Company – Based in Fort Worth, Texas – Founded 80+ years ago – Over $22 Billion in annual revenue – Serve 260 airports in more than 50 countries – 3,300+ daily flights using a combined fleet of more 900+

aircraft – Founding member of the oneworld® alliance

2

Times Are Changing …

1930s AA Ad 2000s AA Ad

3

Change …

Times are changing … not only for American Airlines, but also for business, and for talent.

To quote Gary Hamel, from his 2007 book, The Future of Management :

Over the coming decades, an accelerating pace of change will test the resilience of every society, organization and individual. Luckily, perturbations create opportunities as well as challenges. But the balance of promise and peril confronting any particular organization will depend on its capacity for adaptation. Hence the most important question for any company is this:

Are we changing as fast as the world around us?

4

Performance Management @ AA

AA’s performance management basics:

• Process has been around for decades

• Evolved from a paper-based system to online format

• Annual appraisals, ongoing feedback

• Focus is on development, not merely the appraisal

• Currently use Success Factors

• Coverage for all management, specialists and support staff (front line performance handled separately)

• Approximately 11,500 participants in the process

• 11 leadership competencies – 6 business and 5 people competencies

• Development planning tool w/tie-in to LMS

• Employee biography

But our performance management system and tools pale in importance to the core of performance management at AA – leaders who provide clear, ongoing, high quality feedback.

No easy task …

5

Execute

Succession Plans

Commit to

Strategic Development

Conduct Talent

Reviews

Complete

Performance Management

Assessment Identify Top

Talent/Emerging Talent

Calibration 1-N List Adverse Impact

Analysis Appraisal

Discussion

Talent Management Cycle @ AA

Maintain Successor Lists Promote to Plan Monitor & Adjust

Discuss Top Talent /

Emerging Talent Critical Positions Retention Concerns 9-Box Matrix Successors Development Plans

Competency Development/Training

360 Degree Feedback Targeted Coaching Mentoring Relationship Growth/

Exposure Strategic Assignments

6

TALENT REVIEW PROCESS

• Leaders “present” their employees to the next level • Leverage employee biographies • They share:

– Name/Position – Performance Score – Readiness Assessment – Development Recommendations – Successors Possibilities – Critical Positions – Retention Concerns

If Applicable

7

Talent Readiness

Aspiration

Ability Engagement

29%

• Leaders assess their employees’ readiness to assume higher level positions by considering the performance score and employee’s ability, aspiration and engagement to assume higher level or critical positions. •TOP OR EMERGING TALENT possess the

•ability, •aspiration, and •engagement to rise to and succeed in more senior, critical positions. (See next slide for details)

• Typically only 29% of top performers meet this criteria

8

Assessment Criteria

ASPIRATION

ABILITY

ENGAGEMENT

A combination of the innate characteristics and learned skills

that employees use to carry out their day-to-day work.

Innate Characteristics

• Mental/cognitive agility • Emotional intelligence

Learned Skills

• Technical/functional skills • Interpersonal skills

The extent to which an employee wants or desires the following: • Prestige and recognition in the organization • Advancement and influence • Financial rewards • Work–life balance (May or may not be present in higher level job) • Overall job enjoyment

Engagement consists of four elements: • Emotional Commitment - The extent to which employees value, enjoy, and believe in their organizations • Rational Commitment - The extent to which employees believe that staying with their organizations is in their self-interest • Discretionary Effort - Employee willingness to go “above and beyond” the call of duty • Intent to Stay - Employee desire to stay with the organization

9

First, A Little About Performance Management @ AA

10

A Work in Progress …

We provide myriad resources to AA leaders regarding performance management and we spend countless hours consulting and coaching our leaders on the same

Our “system” works well, and we meet our goals in terms of leaders completing their appraisals and having performance discussions with their people

Something was lacking …

Specifically, many of our leaders and their people found performance management neither rewarding nor useful.

The culprit was the performance discussion leaders had with their people every year

11

It’s All About The Discussion

Some of our leaders did a great job holding discussions with their people

• The “annual appraisal discussion” was the culmination of ongoing feedback throughout the prior year

• It was, for these leaders, a capstone discussion

• So their people were rarely surprised with their ratings, readiness, or development areas

• And their people appreciated the process and benefited from it

But not our leaders all did such

So the task became how do we get traction with a broader set of leaders in holding high quality discussions throughout the year and at year’s end?

We’re not there yet, but the answer is in driving better discussions with our people …

12

5 Elements To Consider in Performance Discussions

1. In a time of uncertainty, assess criticality in performance management

2. Bridge performance discussions with a discussion of potential and leverage talent review insight

3. Good leaders always provide feedback

4. Have your leaders discuss “Keep, stop, & start”

5. Deadlines, reminders and targets are not a bother; they really matter

13

1. Assessing Criticality

"Criticality" considers such questions as:

• Who has unique specialized skills or knowledge of procedures, processes, or systems that your organization cannot do without?

• Who, because of a combination of their skills and knowledge, their work performance, their ability to achieve results, and their dedication, do you consider to be indispensable to the success of your organization?

• Who has critical relationships or a network that cannot be replaced or replicated?

Note: Very few people/jobs will be in this category

14

… assessing criticality

• You have to be realistic in the analysis – who is really critical and who is not?

• Think about the business objectives – who helps your business accomplish its goals?

• Criticality is not shared in the discussion, but it should be the primary consideration in the leader’s mind

• That said, if someone is critical, you need to be in “sell mode” … keep them here!

• If someone is not critical, do not oversell

15

2. The Bridge To Potential

• Bridge performance discussions with a discussion of potential and leverage talent review insight

• The discussion is not all about performance; instead it’s also about potential – For higher positions

– For different lateral positions

• This is a discussion point … but be careful – Must make it clear that the employee is valued and

has high potential

– But not set up unrealistic expectations

16

3. Good Leaders … Give Feedback

• Don’t assume that all your leaders do not or cannot provide feedback in the “prescribed way”

• You probably have many leaders who are doing just what “HR Intends”

– Watch how they provide feedback … they are best practices right in your own backyard!

– So, identify these leaders and laud them

• Give leaders guidance on how to give feedback

• More on this, next …

17

4. Keep, Stop, Start

• Effective performance discussions between leaders and their employees help create a workplace that values individual efforts, develops team members and fosters effective working relationships

• It's a two-way conversation • An approach we encourage at AA is for leaders to

use a simple framework: – Keep – Stop – Start

18

Keep …

• Describe and discuss positive behaviors, actions and skills Goal:

• Let him or her know you value their efforts

• Encourage him or her to continue their good work

For Managers:

• Share successes

• Examine how they were achieved

• Identify what support you need to continue success

For Employees:

19

Stop …

• Talk about behaviors or actions to avoid or improve Goal:

• Provide real examples of what you observed and talked about during past year

• Share specific actions negatively affecting the individual's work, customers, team dynamics, etc.

• Use Crucial Conversations to help discussions

For managers:

• Openly discuss the obstacles you encounter in your work

• Work with manager to formulate a plan to overcome these hurdles

For employees:

20

Start …

• List new behaviors to boost performance and career growth; map a course to achieve them Goal:

• Be specific and mentor

• Share your knowledge, network and resources

• Help team members achieve successful outcomes

For managers:

• Be open to feedback

• Ask questions, seek information and gain understanding

• Create Development Plan

• Take action

For employees:

21

5. Deadlines Matter

• Leaders owe it to their employees to have an open, honest, and timely feedback session

• Ensuring those discussions are timely means there must be a schedule that is taken seriously

• In other words, deadlines do matter, especially to those on the receiving end of the discussion

• Ensuring leaders meet those deadline, however, does not mean that we should behave like the “HR Police” in enforcing such

22

Consistency

• Finally, a word about consistency of discussions across managers …

• Make the most of calibration / talent review sessions

• The talent review / calibration meeting among leaders that will inform and enhance the performance discussions with employees – To ensure people are rated in a consistent way

– To vet possible discussion points with individuals

23

Thank You! Questions?

24

Strategic Performance & Change Management Conference

Actuate - The BIRT Company™

Spider Strategies, Inc. Association for Strategic Planning Process Excellence Network Strategy Management Group

If you would like to receive the free IQPC brochure

directly email [email protected]

November 13-15, 2012 in New Orleans, LA

View the Strategic Performance

& Change Management program

here: http://tinyurl.com/8wxywgc