Documente Academic
Documente Profesional
Documente Cultură
Josh Bersin,
Principal Analyst
June 2011
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TABLE OF CONTENTS
Introduction The Biggest Challenge in Management: Replicating High Performance Implementing the Science and Strategy of Fit Focus on Fit Drives Market Share Growth at Vodafone Focus on Fit Drives Dramatic Improvement in Sales at Bon-Ton Stores Focus on Fit Drives Growth at Regeneron How to Apply the Science and Strategy of Fit Conclusion Appendix I: Case in Point Appendix II: Case in Point Appendix III: Case in Point Appendix IV: Case in Point Appendix V: Table of Figures 4 6 8 11 13 15 17 18 19 22 24 26 28
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Introduction
The business world is undergoing rapid change. Globalization, shortened product cycles, new technologies, and the recovering economy have created new business challenges. What is the key to creating an enduring, globalized, high-performing business? The answer lies in people. While executives know that innovation, product leadership, and customer service are keys to success, they also know that without the right people, none of these strategies can succeed. Our research on leadership and talent management proves this. During the last three years, organizations which rate among the 10 percent in talent management significantly outperformed their peers. These people-focused businesses generated 26 percent more revenue per employee, had 40 percent lower turnover rates, and were 24 percent less likely to have had layoffs during the last recession1. We also know that these high-performing companies are filled with people who are passionate, productive and highly engaged2. Kenexa, a global provider of business solutions for human resources, found that organizations that rank in the top 25 percent in employee engagement achieve earnings per share almost 2.5 times higher than average3. There is a magic element to business success and it revolves around how we manage people. What are the keys to this people-driven success? Traditionally managers have been taught that people performance is driven by the performance management process: create a vision, develop goals, align people toward these goals, and hold them accountable. Fortune 100 companies, like bellwethers GE, IBM and others, have promoted this process for years, and innumerable authors and consultants have written books and articles about the need for strong performance management, the need to differentiate people, and the need to provide coaching and development to employees. Those activities are indeed important. But our research shows that peak-performing companies go much further. They do not only practice great management; they have learned how to make great hiring decisions for the business and for each individual role.
1 For more information, Talent Management Factbook 2010: Best Practices and Benchmarks in U.S. Talent Management,
Bersin & Associates / Karen OLeonard and Stacey Harris, September 2010. Available to research members at www.bersin.com/ library or for purchase at www.bersin.com/tmfactbook. 2 Employee engagement refers to an employees job satisfaction, loyalty and inclination to expend discretionary effort toward organizational goals. Companies typically measure engagement through an annual employee survey. Kenexa, a leading provider of engagement research and services, has developed a global database of engagement factors and helps companies to implement rigorous engagement measurement programs to identify weaknesses in management, leadership, business processes and culture. Many other consulting firms also offer various types of engagement surveys, and many companies do this themselves. 3 Kenexa WorkTrends Annual Report, 2008.
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These peak-performing companies, such as Google, Apple, Zappos, and Amazon.com, outdistance their competition by understanding how to select and promote the right people. They have identified the personality types and traits that reinforce their business proposition and culture, largely by studying the characteristics of high performers. They focus on who they hire, not just what people do and build tools and systems to help managers and leaders assess and attract the right type of people into each particular job. The implement something we explore in this research: the science and strategy of fit.
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Distribution of High-Performers
Peak Performers Top 10% who Generate 80% of Value
Individual Job Performance
How do we create more of these top 10%? Low Performers Those who must be developed, moved, or asked to leave Mid-Level Performers Keeping the Business Running
Number of People
Our research shows that most managers are not trained or equipped to meet this critical challenge4. They understand the principles of performance management and are armed with tools to help them set goals and evaluate people, but they do not understand how to build world-class teams.
TalentWatch Q1 2011, organizations rate first line and mid-level management readiness as the weakest part of their
organizational readiness. Only 30% of organizations rated their first-line or mid-level leadership as fully ready or excellent. (insert link)
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The science and strategy of fit can help. By applying the principles that we will explain in this report, any organization can replicate high performance, driving tremendous increases in customer loyalty, revenue, market share and profitability.
The Main Idea: Hundreds of books have been written on the importance of traditional performance management creating a top-level strategy, setting goals, measuring progress against those goals, identifying high performers and weeding out low performers. Those activities are important. But many top companies are discovering a lesser known and yet highly effective means of creating a high-performing organization: applying the science and strategy of fit. e
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The science of fit is part of Industrial and Organizational Psychology (called IO Psychology), which is a discipline of skills
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You will find that many of the characteristics of high performers are common across the company they make up your culture and employment brand. Other fit characteristics are very role and discipline specific. Together these characteristics tie your company together and make up your organizational culture. This focus on fit creates a flywheel of high performance. Managers now have the tools they need to help hire the right people into their open positions. Employees now have a model for success which they can use for their own development plans. Executives understand how to heighten overall job satisfaction and engagement. Employees also feel more comfortable in their jobs because they succeed. And the organization becomes more collaborative and productive, driving greater revenues and profit. Kenexa, a company which focuses heavily on recruitment and employee engagement, uses a formula to explain this process: i X e =s, where i represents individual, e represents environment, s represents success, and X represents the fit characteristics. When you multiply the right individual by the right environment, success is inevitable. Using the science and strategy of fit, an organization can identify the right i, create the right e and guarantee the s.
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Case in Point: AMC Theaters Uses Fit to Drive Profitable Growth (contd) engagement scores rose. Turnover rates fell by 11 percent. These results, multiplied across more than 320 theaters around the world, had a major impact on AMCs bottom line. Overall profits rose to the highest in the industry. e
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Case in Point: Vodafone Qatar Leverages Fit to Build Market Share (contd) Vodaphones fit-focused talent strategy worked amazingly well. In less than two years, Vodafone Qatar became the most highly engaged workforce in Vodafone and the most profitable new business in the company. Today, Vodafone holds more than 30 percent market share in Qatar, and the percentage is rising. The companys net-promoter score (the percentage of customers who would actively recommend Vodafone to their friends) was more than 81 percent, among the highest in Vodafone around the world. This fit model also helps the company to out-innovate its competition. By thinking about how to improve the lives of people in Qatar, the company found that many workers struggle each week to find time to go to Western Union and wire money home. To address this need, Vodafone partnered with a local bank to launch a service that enables electronic fund transfers directly from the cell phone. This service greatly boosted Vodafone Qatars business and caught the competition off guard. e
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The theory behind this traditional approach to performance management, developed in the 1950s and promoted by such
companies as GE over the years, is what we call the competitive assessment model. It assumes that an organization, like any ecosystem, has a ready supply of talented people, and that through the process of setting clear goals, competition and a culture of accountability, high performers will advance and low performers will either improve or leave. It focuses heavily on accountability and training and assumes that any rugged individual can rise to the top. It often leaves out the need to clearly identify the characteristics of success and build strong science to screen and assess who the right people are. 8 Bersin & Associates TalentWatch Summer 2010. Among 350 senior HR and business leaders, 72 percent of organizations rate the readiness of first-line and mid-level managers to lead as weak or well behind what is needed. This trend has remained consistent over the last three years.
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Conclusion
Fit is a simple but profound concept that managers at all levels should understand. Unlike the traditional performance management process (which focuses on goal-setting and appraisal), the science of fit forces the organization to understand success drivers at an individual level. Organizations can identify these drivers by studying the characteristics of high-performers and then use this information to help managers better hire, develop, and coach to fit. When applied across an organization, the science of fit helps leaders create a strong and enduring company culture one which attracts the right people and encourages people to find the best roles where they can add the most value. Engagement levels go up, and the organization becomes more agile and customer focused. The examples in this research-- AMC, Bon-Ton, Regeneron, and Vodafone each demonstrate how a focus on fit can improve sales, customer service, business growth, and overall employee satisfaction. We hope this research helps you rethink your management approach and gives you new tools to drive performance in your own organization.
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Case in Point: Biotech Company Regeneron Harnesses the Science of Fit (contd) new things and continuously innovate. This culture was distilled into five statements about people at Regeneron: 1. Science drives our business, and passion drives our science. 2. We are a select team. 3. You will be challenged every day. 4. Thats the way weve always done it is the wrong answer. 5. We wont let bureaucracy drive away good ideas. These statements became known as the Regeneron Five. They were posted on walls throughout the company. Stories were published about employees who embodied each of the principles, which became the core of Regenerons new employment brand. An employment brand is the image a company projects to job candidates. By carefully creating a new series of recruiting programs centered on the ideas set forth in the Regeneron Five, the company could change its recruiting process from a funnel to a tunnel carefully finding just the right candidates who fit at Regeneron. One of the campaigns Regeneron used, for example, was titled Five Reasons You Do Not Want to Work for Us. Another was Five Things to Know Before You Say Yes. These campaigns challenged candidates to think about the Regeneron Five, and to decide for themselves whether they were innovative, passionate and focused enough to join the company. The campaign was a huge success. The recruitment process accelerated so quickly that Regeneron made its recruitment targets almost a year earlier than expected. The company set out to embrace the Regeneron Five internally. Regenerons onboarding program, performance management program, leadership development program and future succession program are now all built on these key identity statements. The senior vice president of human resources and CEO have seen a transformation. Recruitment has been easier, and the quality of new employees has risen dramatically. More job applicants approach Regeneron, instead of always waiting for the company to approach them. And Regeneron has attracted some of the most passionate scientists in the industry. This passion enables Regeneron to pursue innovation, an area where many big pharmaceutical companies today no longer excel, giving Regeneron a strong competitive advantage. Without its keen focus on fit, however, Regeneron might have stalled, failing to become the thriving company it is today. e
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Case in Point: Vodafone Qatar Leverages Fit to Build Market Share (contd) Vodaphone Qatars fit-focused talent strategy worked amazingly well. In less than two years, Vodafone Qatar became the most highly engaged workforce in Vodafone and the most profitable new business in the company. Today, Vodafone holds a market share of more than 30 percent, and the percentage is rising. The companys net-promoter score (the percentage of customers who would actively recommend Vodafone to their friends) was more than 81 percent, among the highest in Vodafone around the world. This fit model also helps the company to out-innovate its competition. By thinking about how to improve the lives of people in Qatar, the company found that many workers struggle each week to find time to go to Western Union and wire money home. To address this need, Vodaphone partnered with a local bank to launch a service that enables electronic fund transfers directly from the cell phone. This service greatly boosted Vodaphone Quatars business and caught the competition off-guard. Does Vodafone still use traditional practices of rating and ranking? Yes, of course. But each employee conversation is built around the concepts of mission, culture and fit. As Graham Maher puts it, By continuously reinforcing our mission in every single way, we can build an organization of passionate, high-performing people who fuel our growth, deliver for our customers and drive our team ever faster toward success. e
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About Us
Bersin & Associates is the only research and advisory consulting firm focused solely on WhatWorks research in enterprise learning and talent management. With more than 25 years of experience in enterprise learning, technology and HR business processes, Bersin & Associates provides actionable, research-based services to help learning and HR managers and executives improve operational effectiveness and business impact. Bersin & Associates research members gain access to a comprehensive library of best practices, case studies, benchmarks and in-depth market analyses designed to help executives and practitioners make fast, effective decisions. Member benefits include: in-depth advisory services, access to proprietary webcasts and industry user groups, strategic workshops, and strategic consulting to improve operational effectiveness and business alignment. More than 3,500 organizations in a wide range of industries benefit from Bersin & Associates research and services. Bersin & Associates can be reached at http://www.bersin.com or at (510) 347-4300.
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