.png)
Building Performance Metrics Part 3 of 3
5 December 2011:
Download the PDF 
Devising Meaningful Performance Metrics
Pay-for-performance is the predominant employment remuneration model in the private sector and increasingly in public sector institutions. Metrics matter, as they translate directly into financial gain or loss for employees. Constructing a meaningful performance rating system is critical, yet surprisingly difficult to get right. These systems often end up being ‘gamed’ by employees anxious to increase their bonus, and by managers keen to demonstrate that they have been instrumental in improved team performance.
A key insight from the Executive Briefing is that the success of a performance management system depends far less on the sophistication of the underlying metrics than it does on managers‘, and HR’s, willingness to look at what is really driving performance data.
Performance Metrics and Nokia Siemens Networks’ Consistency in Leadership Initiative
Nokia Siemens Networks’ Line Manager Index system was developed as part of a larger change management program at the company, aimed at reversing revenue decline by unifying the company around common leadership values (described in more detail in part 2 of this article series). “Once we had agreed on and rolled out our new leadership code, we moved on to develop a Line Manager Index of 10 measurement criteria reflecting leadership code behaviours, “ said Eric Sorin, Global Head of HR Center of Expertise at Nokia Siemens Networks. “We incorporated these criteria into the annual engagement survey and used them in reviews of line managers with over six direct reports.”
The index gives a score per criteria as well as a total performance rating. It indicates the individual’s performance in comparison to the average score for the manager’s line-of-business as well as against the company average, and against the top 90th percentile. The metrics are used to identify a personal leadership skills development plan. Sorin believes that whilst performance rating metrics are useful, managers need to understand what is driving the data. He pointed out, for example, that some managers who were seen by their own management as top performers received low scores from their team members on NSN’s Line Manager Index ranking. “We gradually realized that some people are good at managing up, but were not doing so well at managing down.”
Building Meaningful Performance Metrics
- Make sure the link between the performance target and the company goals is clear and relevant.
- Keep the number of metrics to a minimum – under 10 if possible.
- Ensure managers and HR spend time understanding and discussing the reasons for the results.
- Remember that all systems will be gamed and that the remedy for this is not new metrics, but more time spent ensuring ownership of corporate and individual goals by management and employees.
About Eric Sorin
Eric Sorin is the Global Head of the HR Centre of Expertise for NSN and holds a master degree in Human Resources from the Sorbonne university in Paris. He started his career with Thomson Consumer Electronics where he faced the sensitive task of closing industrial sites and organizing the redeployment of hundreds of redundant employees (mostly blue collars). This first and “tough” experience shaped some of his core beliefs as a HR professional.
He then joined Hewlett Packard in 1988 where he held a number of roles for the PC and Network businesses (recruitment, HR development, HR manager, and C&B). He relocated to the UK in 1999 and was soon appointed as Director of Compensation for the EMEA region where he drove the integration of compensation programs following the acquisition of Compaq.
After 15 years spent at HP, Eric joined Nokia in 2004 as Global Head of Compensation. He transitioned to the newly formed Nokia Siemens Networks joint venture in 2007 as Global Head of C&B in charge of aligning related programs and policies for 60,000 employees in more than 100 countries. Since 2009, Eric is the Global Head of the HR Centre of Expertise for NSN where he leads a team of 75 HR experts distributed in 25 countries, responsible for developing and deploying the HR corporate initiatives in the areas of talent, leadership and organization development in addition to compensation & benefits.
About Raytheon Professional Services
Today, more than ever, your organisation’s success is measured by the performance of your people. In a challenging economy, outsourcing training to Raytheon Professional Services can significantly lower costs while extending the skills and knowledge of your people across the enterprise.
RPS is a leader in global learning solutions and training outsourcing. We are among the top five outsourced training providers in the Black Book HRO: Training & Learning Services.
How do we help businesses like yours meet their critical objectives? We design, implement and manage training solutions that align performance among employees, customers and partners, enabling companies to meet their business goals. Then we apply the best commercial solutions, processes, tools and experts to make our programs available anytime, anywhere.
With more than 900 professionals, RPS helps leading companies rethink the way they deliver training across their enterprise, in more than 99 countries and 28 languages. For more information, visit our website www.rps.com
About CorporateLeaders
CorporateLeaders is an exclusive independent network that inspires business and leadership by providing a trusted forum for executives to network, exchange ideas, share lessons learned and drive business forward in an ever changing environment.
We focus on providing exclusive membership services, intimate and content rich networking events, research, thought leadership and advice on business transformation with the executive needs and experiences at its core. For more information, visit our website: www.corporate-leaders.com
