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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
Talent Management Cycle @ AA

       Complete
Performance Management


                               Conduct Talent
                                  Reviews
   Assessment
   Identify Top
    Talent/Emerging
    Talent                                                    Commit to
   Calibration
   1-N List             Discuss Top Talent /          Strategic Development
   Adverse Impact        Emerging Talent
    Analysis             Critical Positions
   Appraisal
    Discussion           Retention Concerns
                         9-Box Matrix              Competency                      Execute
                         Successors                 Development/Training        Succession Plans
                         Development Plans         360 Degree Feedback
                                                    Targeted Coaching
                                                    Mentoring
                                                    Relationship Growth/       Maintain Successor Lists
                                                     Exposure                   Promote to Plan
                                                    Strategic Assignments      Monitor & Adjust
                                                                                                            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       If Applicable
   –   Retention Concerns




                                                        7
Talent Readiness
• 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.
                                                        Aspiration
•TOP OR EMERGING TALENT
 possess the
     •ability,
     •aspiration, and                                      29%
     •engagement
                                              Ability                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
              A combination of the innate characteristics and learned skills
              that employees use to carry out their day-to-day work.
  ABILITY                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
ASPIRATION                • 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
ENGAGEMENT             • 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 …

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




  For        • Let him or her know you value their efforts
             • Encourage him or her to continue their good work
Managers:
   For       • Share successes
             • Examine how they were achieved
Employees:   • Identify what support you need to continue success


                                                                      19
Stop …


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


             • Provide real examples of what you observed and
               talked about during past year
  For        • Share specific actions negatively affecting the
               individual's work, customers, team dynamics,
managers:      etc.
             • Use Crucial Conversations to help discussions


   For       • Openly discuss the obstacles you encounter in
               your work
             • Work with manager to formulate a plan to
employees:     overcome these hurdles


                                                                 20
Start …

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



             • Be specific and mentor
  For        • Share your knowledge, network and resources

managers:    • Help team members achieve successful
               outcomes

             • Be open to feedback
   For       • Ask questions, seek information and gain
               understanding
employees:   • Create Development Plan
             • Take action

                                                             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
     November 13-15, 2012 in New Orleans, LA




         View the Strategic Performance
         & Change Management program
         here: http://tinyurl.com/8wxywgc



          If you would like to receive the free IQPC brochure
                directly email taryn.soltysiak@iqpc.com

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

  • 1. THE FUTURE OF PERFORMANCE MANAGEMENT IN AN ERA OF UNCERTAINTY March 27, 2012 1
  • 2. 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
  • 3. Times Are Changing … 1930s AA Ad 2000s AA Ad 3
  • 4. 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
  • 5. 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
  • 6. Talent Management Cycle @ AA Complete Performance Management Conduct Talent Reviews  Assessment  Identify Top Talent/Emerging Talent Commit to  Calibration  1-N List  Discuss Top Talent / Strategic Development  Adverse Impact Emerging Talent Analysis  Critical Positions  Appraisal Discussion  Retention Concerns  9-Box Matrix  Competency Execute  Successors Development/Training Succession Plans  Development Plans  360 Degree Feedback  Targeted Coaching  Mentoring  Relationship Growth/  Maintain Successor Lists Exposure  Promote to Plan  Strategic Assignments  Monitor & Adjust 6
  • 7. 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 If Applicable – Retention Concerns 7
  • 8. Talent Readiness • 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. Aspiration •TOP OR EMERGING TALENT possess the •ability, •aspiration, and 29% •engagement Ability 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
  • 9. Assessment Criteria A combination of the innate characteristics and learned skills that employees use to carry out their day-to-day work. ABILITY 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 ASPIRATION • 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 ENGAGEMENT • 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
  • 10. First, A Little About Performance Management @ AA 10
  • 11. 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
  • 12. 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
  • 13. 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
  • 14. 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
  • 15. … 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
  • 16. 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
  • 17. 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
  • 18. 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
  • 19. Keep … Goal: • Describe and discuss positive behaviors, actions and skills For • Let him or her know you value their efforts • Encourage him or her to continue their good work Managers: For • Share successes • Examine how they were achieved Employees: • Identify what support you need to continue success 19
  • 20. Stop … Goal: • Talk about behaviors or actions to avoid or improve • Provide real examples of what you observed and talked about during past year For • Share specific actions negatively affecting the individual's work, customers, team dynamics, managers: etc. • Use Crucial Conversations to help discussions For • Openly discuss the obstacles you encounter in your work • Work with manager to formulate a plan to employees: overcome these hurdles 20
  • 21. Start … • List new behaviors to boost performance and Goal: career growth; map a course to achieve them • Be specific and mentor For • Share your knowledge, network and resources managers: • Help team members achieve successful outcomes • Be open to feedback For • Ask questions, seek information and gain understanding employees: • Create Development Plan • Take action 21
  • 22. 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
  • 23. 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
  • 25. Strategic Performance & Change Management Conference November 13-15, 2012 in New Orleans, LA View the Strategic Performance & Change Management program here: http://tinyurl.com/8wxywgc If you would like to receive the free IQPC brochure directly email taryn.soltysiak@iqpc.com