CS Wayne Farms SG Final

CASE STUDY CASE STUDY
BERSIN & ASSOCIATES
Overhauling Performance Management

Wayne Farms Phases in Transformative Change
Stacia Sherman Garr, Senior Analyst Amy French, Senior Writer | March 2011
IN THIS CASE STUDY

FOCUS:
TALENT MANAGEMENT
As organizations strive to make their workforces more efficient and effective, they frequently turn to performance management. The HR function is expected to provide performance management tools and processes that align individual efforts with business objectives, develop employees abilities and fairly reward employees efforts. When performance management does not work, organizations expend extra effort and money on activities and employees that are not driving the organization forward. This was the situation at Wayne Farms in 2003. Performance management was uneven at best. Individual goal-setting and coaching toward those goals were nonexistent. Performance reviews were delivered annually but on employees anniversary date, not on a companywide timeframe. As a consequence, no performancemanagement activities were aligned with business goals. Many employees did not take performance appraisals seriously; evaluations were often late, if they were delivered at all. The vast majority of employees received the same, midlevel ratings, with almost no employees receiving ratings at the high or low end of the scale. Ratings were an unreliable indicator for rewards, resulting in little or no connection between performance and pay. The time had come for major change, and Wayne Farms CEO hired a new vice president of HR with a vision for revolutionizing performance management as a part of the overall upgrade of the HR function. However, Wayne Farms performance-management overhaul would not happen overnight. It would require a practical
TALENT STRATEGY WORKFORCE PLANNING PERFORMANCE MANAGEMENT LEADERSHIP DEVELOPMENT SUCCESSION MANAGEMENT COMPETENCY MANAGEMENT TALENT SYSTEMS
BERSIN & ASSOCIATES MARCH 2011 NOT FOR DISTRIBUTION LICENSED MATERIAL
OVERHAULING PERFORMANCE MANAGEMENT
strategy for incremental transformation at a pace the organization could accept and the HR team could deliver. Each phase would need to bring benefits, while building on previous phases, to maintain leaders engagement with performance management and eventually bring about transformative change. In this case study, we will examine: Changes and development efforts within the HR organization that enabled it to design and implement a performancemanagement overhaul; Wayne Farms strategy for phasing in transformative change to performance-management; and Specific measures taken to introduce performance differentiation, redesign competencies and support change with development. e
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TABLE OF CONTENTS
Company Overview Business Environment HR Environment The Performance Management (PM) Environment The Three Phases of Performance Management Transformation Phase 1: Creating Consistency (2003-2004) Phase 2: Building a Foundation of Accountability and Teaching Key Concepts Phase 3: Modernizing Performance Management (2007-2011) Identify Key Behaviors: Redesigning and Realigning Competencies Automating Performance Management and Adding Midyear Reviews Advancing Managers Skills Performance Differentiation Change Management Business Impact Best Practices Phase in Change at a Manageable Rate Link Performance Management Improvement to Business Impact Get the Activities Right before Automating 23 23 17 18 19 20 21 22 22 14 14 11 9 10 8 6 6 7
Integrate Performance Management with Other Talent Management Elements Lessons Learned Conclusion Appendix I: Overview of Wayne Farm's Performance Management Cycle Appendix II: Wayne Farm's Competencies List of Competencies Appendix III: Topics for Discussion and Learning Key Learnings Ideas for Action Questions to Consider Appendix IV: Table of Figures 25 26 26 29 29 29 30 31 23 23 24
About Us About This Research
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Company Overview
Wayne Farms, a subsidiary of Continental Grain Company, is the sixthlargest poultry producer in the United States1. Headquartered in Oakwood, Georgia, north of Atlanta, the company has 10 production facilities in five Southeastern states. Those facilities range from hatcheries to sites that handle poultry processing or cook chicken for use in prepared food. The company is involved in all stages of poultry production as its leaders say, from farm to fork. As a business-to-business player, Wayne Farms sells both raw and cooked chicken, with raw, or fresh, chicken accounting for about 60 percent of its business. Customers include major brand names, such as Nestle and Heinz. The restaurant chains Jack in the Box, Chick-fil-A and Olive Garden, as well as retailer Costco, also offer a taste of Wayne Farms2.
Figure 1: Wayne Farms at a Glance

Founded in 1929 as Allied Mills Inc. Headquartered in Oakwood, Georgia, north of Atlanta; 10 production facilities in five Southeastern states. Sixth-largest poultry producer in the United States. $1.4 billion in revenues in fiscal 2010. Roughly 9,000 employees, of whom about 1,000 are salaried. Business-to-business, vertically integrated. Brands include Wayne Farms, Dutch Quality House and Platinum Harvest. Two major business units: fresh and further processed, which provides fully cooked chicken for clients including Nestle and Heinz, among many other customers in industrial national and food service distribution markets.
Source: Wayne Farms LLC and Bersin & Associates, 2011.
Business Environment
The poultry industry is competitive, with tight profit margins and the volatility that comes with working in commodities. For example, about 50 percent of Wayne Farms operating budget goes to feed ingredients, such as corn and soy. If the price of corn goes up, it can have a big impact on a poultry companys bottom line. The top two players in the industry account
1 Source: Watt Poultry USA magazine, http://www.wattpoultryusa-digital.com/poultryusa/201102#pg1. 2 Source: www.waynefarms.com and interviews with company leaders.
for nearly 50 percent of the market, meaning most other producers are relatively small and must run tight operations. In 2003, Wayne Farms had excelled financially for several years in a row. But amid cost fluctuations, regulatory pressures and other market forces, the entire poultry industry was looking at a challenging period ahead. To prepare for those challenges or what Wayne Farms CEO described as the next mountain the organization would need its HR function and talentmanagement processes to deliver at a higher level.
HR Environment
This case study primarily focuses on how Wayne Farms planned and implemented a new vision of performance management. To fully understand that evolution, though, it is important to note that an HR transformation was occurring at the same time. Here we will describe the overall HR environment at Wayne Farms in 2003, with special attention to three internal efforts that enabled the HR organization to design and implement a performance management overhaul. Expanding the HR organizations focus and expertise Previously, the role of Wayne Farms HR organization was primarily administrative, not that of a business partner. For the most part, the HR staff had not been expected to weigh in on strategic decisions, and had not tried to extend its impact. In setting a different course, HR leaders educated HR staff on new expectations and how to fulfill them. For example, early efforts included a series of lunch and learn classes on the book Human Resource Champions3. Also, the corporate office began hosting conferences for the full HR team twice a year that included goal-setting activities, educational sessions and the participation of senior leaders. Restructuring the HR organization for greater efficiency The new VP of HRs direct reports initially included the HR manager for each of 13 production facilities4, spread out across six states. Supervising so many individuals left little time for focusing on overarching change initiatives, such as the performance-management overhaul. Therefore, the HR function was reorganized to create a middle layer of HR management area managers who would oversee multiple facilities. In
3 Source: Human Resource Champions, David Ulrich (Professor, University of Michigan Business School) / Harvard Business Press, 1996. 4 Wayne Farms had 13 production facilities in 2003. The company has since consolidated and now has 10 production facilities in five states.
hiring for these positions, the VP looked for individuals who could go beyond their core supervisory responsibilities and contribute expertise in a particular specialty. One area manager, for example, has played a key role in championing the new vision for performance management in place today. Bolstering the HR organizations credibility Across Wayne Farms, business leaders had grown accustomed to having an HR function focused on administrative work. In their eyes, HR existed solely to handle hiring paperwork, negotiate labor contracts and make sure everyone got paid on time. When the new VP asked about HRs past performance, he tended to draw answers like, Its fine, or, I get what I need. But behind those reviews often lurked a lack of awareness of what a more sophisticated HR function could contribute and, in some cases, a distrust of the HR organizations ability to deliver on even its current responsibilities. For example, one prominent business leader had started working with external recruiting agents when hiring needs arose, bypassing HR to ensure the job got done the way he wanted. To change that atmosphere and those attitudes, the new VP of HR and his leadership team emphasized the importance of relationship-building. For example, the VP of HR visited production sites and learned how they operated. Every interaction was an opportunity to listen, offer assistance and then follow through, demonstrating HRs accountability, relevance and credibility.
The Performance Management (PM) Environment

In 2003, Wayne Farms had a basic performance-management system in place for its roughly 1,000 salaried employees. Goals were not consistent, and there was little or no alignment of goals to the companys overall strategy. Each employee was supposed to undergo an annual review, on the anniversary of his or her hire date, and to receive a rating on a scale of 1 to 5. A rating of 1 signified outstanding performance, a 3 signified performance that meets expectations, and a 5 indicated unsatisfactory performance. The new VP of HR identified several weaknesses in this system. First, he wanted to adjust the timing of performance reviews so that they occurred on a common cycle, instead of at different times for different employees. Aligning the timing of assessments would allow synchronized goal-setting. This was a critical first step in enabling the organization to align individual and business goals a best practice of high-performing organizations.
Deeper and more complicated than the issue of timing was the lack of discipline in the review process. In assessing the situation, the new VP of HR found that performance reviews at Wayne Farms often occurred months late or not at all. Managers clearly did not view the appraisals as a priority, and that had to change. Finally, the VP of HR found that managers were unwilling to provide performance ratings that differentiated performance, making it impossible to clearly connect pay to performance. Properly calibrated, the performance review scores should have produced a bell curve of ratings, with approximately 50 percent of the workforce landing in the meets expectations range, 10-15 percent doing worse than that, another 20 percent performing above expectations, and a small portion 5-8 percent truly exceeding expectations. In 2003, 80 percent of employees received meets expectations ratings, 19 percent rated above expectations, and only 1 percent exceeded expectations. Most notably, no one was rated worse than meets expectations. Accenting the irrelevance of the system, it was common for employees fired from the company for poor performance to have received a meets expectations rating in their most recent review.
The Three Phases of Performance Management Transformation

The VP of HR spent the first months of his tenure building relationships, observing and assessing the HR organization, and gathering data to support his assessment. In October 2003, he summarized his findings in a candid presentation to senior business leaders. The summary included a discussion of performance ratings and how their odd distribution illustrated that the system had gotten off track. The VP of HR and the CEO had agreed in prior conversations that such candor was essential to building trust and a common understanding of the need for improvement. As the vice president of HR recalled: It wasnt a pretty picture, but it was what we had. The Wayne Farms HR team worked to change that picture through three consecutive, interlinking phases. We will discuss each in depth in the rest of this section. Here we offer an overview: Phase 1: Creating Consistency (2003-2004). Wayne Farms re-introduced its existing performance-management activities, but with a new, common schedule for all employees and a new emphasis on the discipline required for effective performance management.
Phase 2: Building the Foundation (2005-2006). Wayne Farms collected its first performance reviews under the new schedule, introduced employee self-assessments, and taught key performance-management concepts as a foundation for further change.
Phase 3: Modernizing Performance Management (2007-2011). Wayne Farms designed and implemented a new competency model, advanced the performance-management skills of managers, strived for more accurate performance differentiation to guide pay-forperformance decisions, and transitioned from a paper-based to an automated performance-management system.
Figure 2: Phases of Wayne Farms Performance Management Transformation
Phase 1: Creating Consistency 20032004
Phase 2: Building the Foundation 20052006
Phase 3: Modernizing Performance Management
20072010
Phase 1: Creating Consistency (2003-2004)

The first phase of Wayne Farms performance-management transformation was in some ways as noteworthy for what the HR team did not do, as for what it did. The team did not introduce new tools, forms, competency definitions or technology even though such changes were already a part of longer-term plans. Instead, the team focused on implementing the performance-management activities that were in place, but had become in many ways an empty exercise. This approach might seem counter-intuitive. If youre going to teach employees a performance management activity, why not teach the activity and train on the tools that you expect to use long-term? The VP of HRs answer arose from his assessment of the organizations readiness. He
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believed it was necessary to first establish the habit of doing performance management before adding in new complexity. There also was an element of troubleshooting in the approach. Initial resistance to more meaningful performance management would be easier to rebuff, because the VP of HR was only asking employees to do what they had already agreed to do. As the vice president of HR recalls: It was a culture-based decision that paid off. Teaching a new tool or introducing a new technology has a way of taking the focus away from just learning how to give good, honest feedback and hold people accountable for their actions and that was where we were starting. What did change in Phase 1 was the timing of the performance-review cycle. Going forward, all reviews would occur around the turn of the fiscal year, which for Wayne Farms begins in April. This was a huge step toward getting more accurate performance comparisons and differentiation, as well as ensuring that individual goals aligned with business goals.
Figure 3: Wayne Farms PM Transformation Timeline, Phase 1 New VP of HR starts work, focusing initially on observation, analysis and relationship-building across the enterprise. HR vision presented to senior leaders, setting clear expectations for the aim of all HR actions and initiatives. Uniform performance-review cycle adopted. Going forward, appraisals occur around the turn of the fiscal year, which at Wayne Farms begins in April, to better enable alignment with business goals, as well as more accurate employee comparisons and performance differentiation.
January 2003 October
2004
March
Phase 2: Building a Foundation of Accountability and Teaching Key Concepts

Through Phase 1, Wayne Farms focused primarily on the need for discipline in performance management, with attention also paid to communicating the intentions and ideas that should drive performance-management activities. Early in Phase 2, the company marked a triumph: At the turn of the fiscal year in 2005, the first batch of employee-performance reviews under the new, uniform cycle began to roll in. As the deadline approached, HR leaders emphasized the need to make on-time compliance a high priority by sending weekly reminders to all managers who had not turned in reviews. First in line to set a strong example was the CEO.
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The HR vice president recalls: To support us getting there, I went to (the CEO) and said, Boss, I need you to model the behavior in order to make this happen He really showed his support for the change. He was the first one to have his reviews completed. Not just going through the motions, either. Real conversations. Wayne Farms also added a step to the performance-review process in Phase 2, requiring employees to complete self-assessments before sitting down for reviews with their managers. Self-assessments can make review conversations much more valuable, but they can also seem risky. Its important to set the right tone when asking employees to point out their own flaws to a supervisor. To set an example, the VP of HR read a section of his own self-assessment aloud at an HR staff meeting. He shared that, as a high-energy guy, it was important for him to look for opportunities to pause and listen, and take care not to intimidate people unintentionally. Meeting attendees appreciated his openness.
The Learning Link

In addition to having senior leaders model new performance management behaviors, Wayne Farms embarked on a significant effort to develop the performance-management capabilities of all staff. The investment in performance-focused L&D illustrates Wayne Farms commitment to meaningful, sustainable change. Many organizations assume wrongly that employees have a solid, shared understanding of important tenets. Those organizations build on what is essentially a shaky foundation. Wayne Farms took care to avoid that mistake. Phase 2 education efforts started in the spring of 2005. As managers prepared to award the first merit raises under the common review cycle, they received training on the fundamentals of performance management5 and principles of pay for performance6. The following spring, HR managers conducted additional new training a one-and-a-half-day session on performance management for all managers. This helped managers to refocus and further build their skills as they worked on a fresh round of reviews. Topics included how to conduct effective performance conversations, how
5 This training included basic concepts, such as the definition of job grades and ranges, as well as how to use them within the organization. It also included information on how and why to use merit increases, and the importance of having everyone on the same performance cycle. 6 Pay for performance is both an organizational mindset and a management process that compensates and rewards employees for achieving objectives aligned to the goals and strategy of the organization.
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to develop performance improvement plans, and how to craft individual development plans. Also in Phase 2, Wayne Farms piloted a Situational Frontline Leadership7 course, developed by The Ken Blanchard Companies. Twenty people took the class, eight of whom went on to be certified as corporate trainers and continued to educate the companys managers. Its important to note that these trainers included business leaders, as well as HR leaders. That illustrated HRs growing credibility, as business leaders saw enough value in the programs HR was creating to want to participate. This course became the foundational leadership development course at Wayne Farms. To date, 700 company leaders have attended the course. In another move to embed an emphasis on learning into its culture, Wayne Farms deployed a learning management system (LMS) in December 2005. The system has enabled HR leaders to develop courses for employees on everything from sexual-harassment awareness to advanced business acumen. To date, employees have completed a total of more than 5,000 courses, at a savings of nearly $800,000, compared with the costs of arranging similar training with outside contractors.
Figure 4: Wayne Farms PM Transformation Timeline, Phase 2 First uniform performance appraisal cycle completed. The CEO sets a clear example for the rest of the organization, finishing reviews of his direct reports before anyone else. Pay-for-performance training administered to managers for the first time. Situational Frontline Leadership training is piloted with a class of 20 crossfunctional leaders. Eight ultimately become certified as corporate trainers for this course from The Ken Blanchard Companies. First merit raises awarded under new performance-management cycle. Learning management system (LMS) deployed. HR managers conduct 1.5-day performance-management training for all managers. Topics include how to conduct effective performance conversations, how to develop performance-improvement plans, and how to craft individual development plans. Self-appraisals introduced.
March April/May 2005 April July December March April
2006
7 Situational Frontline Leadership is a training program from The Ken Blanchard Companies that teaches managers who lead at the front-line or supervisory level. Find more information at www.kenblanchard.com.
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Phase 3: Modernizing Performance Management (2007-2011)

In Phase 3, HR leaders were able to start implementing part of their ultimate vision for performance management. Well discuss four major areas of progress, including the development of a new competency model that enabled managers to better understand the behaviors necessary for the organizations success. In addition, the organization automated many performancemanagement activities, while adding midyear reviews. Further, HR leaders guided managers to take performance-management skills to the next level, introducing them to more advanced concepts. Finally, managers began using a new process to differentiate performance among their employees.
Figure 5: Wayne Farms PM Transformation, Phase 3
Identifying Key Behaviors
Developed new competency model (2007) Implemented competency model (2008)
Automating and Adding Mid-Year Reviews
Introduced SuccessFactors Performance Manager technology Introduced optional mid-year reviews
Advancing Managers Skills
Crucial Confrontations training Talent Culture training Competency training Training on new PM process
Driving Performance Differentiation
Introduced performance distribution for top and bottom performers Analyzed and shared pay for performance data
Identify Key Behaviors: Redesigning and Realigning Competencies

The process of defining competencies and scales for measuring performance forces organizations to think deeply about what they value, where they want employees at different levels to concentrate efforts, and what development opportunities they want to provide. The aim is to establish performance-management standards that are well-aligned with business goals and to promote more consistent understanding and application of those standards.
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HR leaders at Wayne Farms had long intended to redesign the organizations competencies8, but waited until solid performance-management activities were in place. The existing competencies did not adequately target the skills, behaviors and knowledge the organization needed to achieve its strategic objectives. HR leaders saw room for improvement, and during Phase 3, the time for pursuing that improvement was right for several reasons. First, core performance-management activities were in place, and the workforce on the whole had been educated on the intentions and concepts driving those activities. A new, related body of knowledge was unlikely to get lost in a sea of simultaneous change. Second, HR leaders planned to implement new technology to automate performance-management activities. It would not make sense to fill a new system with old, soon-to-be out-of-date competencies. The competency redesign needed to come first. Finally, the most targeted competencies are developed in collaboration with business leaders. They know best what skills and aptitudes are most valuable on the job. By Phase 3, relationships between HR leaders and business leaders had clearly progressed to a point where such collaboration was possible.
The redesign process began at an HR managers meeting in October 2007 and drew heavily from the books The Leadership Pipeline9 and The Career Architect Development Planner, modifying ideas to meet Wayne Farms needs10. Using the definitions outlined in The Leadership Pipeline, Wayne Farms looked at competencies in three categories: individual contributor, leader of people and leader of leaders. The competencies most valuable in an individual contributor differ from the competencies that enable a leader of people or a leader of leaders to succeed. The challenge for any organization in developing a competency model is to identify competencies for each category that are most worth encouraging and developing.
8 Competencies are clearly defined sets of skills, behaviors and knowledge that are used to evaluate, assess and develop members of an organization. Organizations use competencies to help identify skills gaps, in succession management to identify and prepare leaders, and in training to develop competency-based learning programs. Organizations typically have four types of competencies core principles or values, leadership competencies, career path and functional competencies. The word proficiency is used to measure someones attainment of a competency. 9 Source: The Leadership Pipeline: How to Build the Leadership-Powered Company, Ram Charan, Stephen Drotter and James Noel, Jossey-Bass, 2000. 10 Source: The Career Architect Development Planner (Third Edition), Michael M. Lombardo and Robert W. Eichinger, Lominger Limited, 2000 (part of The Leadership Architect Suite).
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The HR managers at the meeting started the work by whittling down the list of 67 competencies suggested in The Career Architect Development Planner to a list of 15 for each category of employee, selecting those they believed to be most important. HR managers then shared the lists with more than 100 leaders across the organization including leaders at each production facility where they narrowed the list further, to eight competencies per category. The VP of HR then reviewed the recommendations with each of the CEOs direct reports, and they refined the list to a final five. Figure 6 shows the final competencies Wayne Farms chose for each level. In assessing employees attainment of different competencies, managers rely on definitions that are far more detailed. (See Appendix.) HR leaders also orchestrated training on each of the competencies for all affected employees. Training courses were conducted in person and via prepared modules, using the LMS implemented in Phase 2.
Figure 6: Competencies and Accountability Levels at Wayne Farms Accountability Level Competencies Functional/technical skills Action orientation Problem-solving Learning on the fly Interpersonal savvy Sizing up people Delegation Planning Customer focus Conflict management Strategic agility Business acumen Building effective teams Customer focus Command skills
Source: Wayne Farms LLC, 2011.
Individual Contributor
Leader of People
Leader of Leaders
After identifying competencies, leaders at Wayne Farms went one step further in determining how managers should weigh the attainment of those competencies. They decided on a shifting, weighted scale designed by the VP of HR, - that placed greater importance on goal attainment for individual contributors than for leaders of leaders, and greater importance on competency attainment for leaders of leaders than for individual contributors.
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This weighted scale affects an employees end-of-year overall performanceappraisal rating. The theory underlying this decision is that as leaders become more senior, it is increasingly important that they demonstrate the right skills, behaviors and knowledge, given the impact they have on others. Further, leaders primarily achieve their goals through others, so it is critical that they exhibit the right behaviors. Wayne Farms scale appears in Figure 7.
Figure 7: A Shifting Balance Employee Level Individual Contributor Leader of People Leader of Leaders Goals 70% Competencies 30%
50% 30%
50% 70%
Automating Performance Management and Adding Midyear Reviews

The next step for Wayne Farms was to automate performance management, moving away from a paper-based system to a technology solution from the vendor SuccessFactors.11 Introductory training on the new software began in March 2008. The new system was implemented as part of the performancereview process with the start of the next performance-management cycle. HR leaders recognized the potential discomfort some employees and managers might feel about the new technology and took care to provide information to alleviate concerns while preparing everyone for the change. Training sessions anticipated and answered overarching questions such as What are we doing? Why are we doing it? and How will it affect me? in straightforward, unthreatening language. While Wayne Farms automated performance management, it also added midyear reviews to the performance-management cycle. Top HR organizations increasingly recognize the need for performance management
11 SuccessFactors is a global provider of business-execution software solutions. Learn more at www.successfactors.com.
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to extend beyond a single, once-a-year performance review12. At Wayne Farms, the midyear reviews marked the start of a push toward greater year-round attention to employee performance and development. The company chose to make the midyear reviews optional casting the review as a development opportunity, rather than another appraisal event. This approach has worked for Wayne Farms, with nearly 80 percent of employees completing the midyear review (compared with 100 percent completing the year-end review). Critical to Wayne Farms successful automation of performance management was that the organization created a feedback loop throughout the implementation process. After the first use of both the automated midyear and year-end appraisal processes, Wayne Farms surveyed the workforce to learn how well the processes worked. After each round of feedback, Wayne Farms adjusted the processes to respond to what the workforce needed. For example, in the initial rollout of the automated performance-review form, managers were required to enter a comment under every goal and to give a summary of the goal. Managers found this to be overkill, and asked for a simpler format. Wayne Farms responded, customizing the form to the needs of the managers.
Advancing Managers Skills

In addition to automating the performance-management cycle, Wayne Farms was sure to advance the skills of managers. That work had begun in Phase 2, with the basic introduction to performance-management training. In Phase 3, Wayne Farms focused on moving managers knowledge and skills to the next level, primarily through courses that focused on the following subjects: Crucial Confrontations13This course was designed to help managers have tough feedback conversations with direct reports and others in the business. The entire senior leadership team completed the courses pilot class, and nine cross-functional leaders were certified as corporate trainers. A member of the senior management team has kicked off and sponsored each subsequent training session. To date, 341 leaders have completed this training. Creating a talent cultureThis course focused on managers who hire employees and was designed to enhance Wayne Farms focus on a
12 For more information, Development-Driven Performance Management: The Path from Once-a-Year Performance Management to Ongoing Employee Development, Bersin & Associates / Stacia Sherman Garr, September 2010. Available to research members at www.bersin.com/library. 13 This is a product offered by Vital Smarts. http://www.vitalsmarts.com/.
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talent culture. Managers were given training on how to interview and select highly talented people who would fit the Wayne Farms culture. Exhibiting core competenciesThis training was designed to help managers effectively develop the newly created competencies. Course topics include delegation, conflict management, strategic agility and planning.
Performance Differentiation
As Wayne Farms PM transformation moved from Phase 2 to Phase 3, the distribution of performance ratings remained an issue. On the established scale of 1 to 5, too many employees were still getting a 3. With so little differentiation, it was hard to know whether performance ratings were providing the right guidance for distributing merit raises. To combat this situation, HR added a dimension to the performance appraisal process, asking leaders to identify those employees in their top 20 percent and their bottom 10 percent in terms of performance, regardless of how those employees had been rated on the 1-to-5 scale. This at last began to provide a base of information to determine whether Wayne Farms was actually paying the best performers more than the worst. Without a method to differentiate employee performance, Wayne Farms had no way to reward superior performers. Rewarding high performers for their greater effort is important; Bersin & Associates research has found that companies with higher standard deviations in compensation have 15-20 percent better performance . By forcing managers to identify their top and low performers, the organization could put in place measures to appropriately reward employees at the top and bottom ends of the performance distribution. While perhaps not a perfect solution, this new process was a step in the right direction.
Figure 8: Wayne Farms PM Transformation Timeline, Phase Spring Manager training offered on Crucial Confrontations and creating a talent culture. Performance distribution introduced, whereby managers have to identify the top 20 percent of employees and bottom 10 percent. July October Pay-for-performance analysis of data provided to senior leaders, showing average increases at each performance level. Development of new competency model started.
2007
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Figure 8: Wayne Farms PM Transformation Timeline, Phase (Cont'd) Transitioned to new competency-based approach using automated system. Includes education of all employees around new PM technology and creating SMART goals using new tools. Formal midyear review completed using new competencies and automated performance-management technology. Pilot class for competency training introduced, focused on delegation. It further supplements Situational Frontline Leadership and serves as an effort to refresh and sustain that learning. More than 400 leaders of people have completed this course. Other courses followed on topics that included conflict management, strategic agility and planning. Midyear employee survey conducted to find suggestions for improvement to the new midyear appraisal process. Based on feedback from 219 employees, numerous changes are made. Automated year-end appraisal process introduced, including use of new competencies. Year-end appraisal survey conducted to identify areas of improvement for the yearend appraisal process. Based on feedback from 380 employees, changes were made. Midyear review process conducted, focusing more on the effectiveness of conversations, as opposed to learning to use automated tools. Support continues for manager/employee dialogue on progress against goals/competencies with structured dialogue. Year-end appraisal process conducted. Midyear review process conducted.
Spring
September
2008
December
March
June 2009
October
March 2010 October
Change Management
Any leader who intends to pursue major change is well-served by ensuring good relationships are in place with key stakeholders and opinion leaders across the organization. For leaders who are new to an organization, that task is in some ways more difficult, because they must build relationships from scratch, and perhaps overcome issues that predate their arrival. It also can be time-consuming to learn not only how things are supposed to get done, but also how they actually do get done and by whom.
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But new leaders also have an advantage because they are new. People are paying attention. A new leaders honeymoon period is full of firsts that set the tone for what will follow. These firsts are examples of what educators call teachable moments. In 2003, his first year with the company, Wayne Farms new VP of HR took care to get to know the organization he had joined, as well as the people who kept it running. He spent a lot of time away from the corporate office in the field, building key relationships and learning how production facilities operated so that he could speak knowledgeably and listen from a position of insight. In many cases, he accompanied the CEO on these site visits, helping to make an impression as someone who would work closely with the chief executive. Not everyone who pursues major change in an organization is new to that organization, but everyone who pursues major change can leverage the firsts that arise along the way. The first meeting of a task force. The first posting of a blog. The first administration of a survey. Each of these things, and many more, can be a teachable moment to use in shaping perceptions. Also, its important to note the significance not only of forging relationships, but also of sustaining them. HR leaders at Wayne Farms cross paths with other key stakeholders across the enterprise in a variety of settings. Site visits. Leadership classes. Regular meetings. It could not be assumed that opportunities for productive interaction would present themselves; HR leaders sought them out and made sure they were mutually beneficial. HR leaders at Wayne Farms did several other things well in the area of change management. For example, as we have discussed at length, they assessed the organizations readiness before taking a new step, and were careful not to pursue too much change simultaneously in a single area. Also, they made a habit of communicating with candor about the intent and scope of changes undertaken, promoting an atmosphere of trust. Finally, they supported change with education, implementing a new LMS for just that reason.
Business Impact
The overall business impact of a performance-management transformation is hard to measure. That said, the HR team has worked to monitor businessperformance metrics that the new performance-management activities likely affect. In this section we look at two of those indicators. While its difficult to point to them as direct results of performance-management changes, its no leap to say they are signs that HR is having a positive impact, and performance-management efforts are part of that.
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One measure of an HR functions effectiveness, for example, is the level of trust and respect it has from business leaders. Before the HR and performance-management transformation at Wayne Farms, trust and respect were at a low, as evidenced by business leaders over-reliance on external recruiting agents. In some cases, business leaders had embarked on recruitment efforts without consulting HR at all, making it hard to keep recruitment costs in check. In one year, Wayne Farms spent $724,000 on such contract work. By re-establishing the HR functions credibility and accountability, the VP of HR was able to cut that spending by more than half, bringing it down to $350,000 within the first year, reducing it a further $100,000 in the second year, and maintaining it at a small fraction of the initial cost since. Another improvement is a dramatic drop in employee turnover. From fiscal 2003, the year the performance-management overhaul began, to fiscal 2010, turnover has fallen by 25 percent, as Figure 9 shows. The VP of HR actively pursued this improvement, emphasizing its importance by translating the turnover numbers into dollars for senior leaders, instead of just leaving it as percentages or headcount comparisons. The reduction over the past seven years has saved Wayne Farms an estimated $6.9 million in direct/indirect recruitment, retraining, productivity and efficiency costs.
Figure 9: Wayne Farms Reduction in Hourly Turnover 2003 Versus 2010
FY03
60% 25% decrease
FY10
45%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Best Practices
Four best practices stand out from Wayne Farms performancemanagement transformation.
Phase in Change at a Manageable Rate

One of the strengths of the Wayne Farms transformation was HR leaders attention to the rate at which the company could digest change. While some might say that the transformation could have been executed more quickly,
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the leaders at Wayne Farms believe it was the appropriate speed for their organization. They took the time needed to engage leaders in the change effort, and to secure commitment not just compliance. They pushed the organization ahead, but not so fast that the rest of the organization was left behind.
Link Performance Management Improvement to Business Impact

Wayne Farms leaders discussed all performance-management activities in terms of how they would impact the business. For example, HR leaders translated employee turnover rates into dollar estimates of cost. They positioned coaching and feedback as methods to enable the business to better achieve its goals, not as HR initiatives. The HR team was able to do this because it spent extensive time with leaders throughout the organization and identified their problems before pushing a solution.
Get the Activities Right before Automating

Wayne Farms focused on high-touch before high-tech. The performancemanagement transformation began with the organization revisiting activities that were supposed to be in place already, and implementing them more effectively. By the time automation occurred, almost all of the elements of performance management were being utilized, with the exception of the midyear review and the new competency model, and the automation was just a matter of putting the right activities online. Though the exact method Wayne Farms used might not be right for every organization, the overall lesson is important. Do not expect automation to fix performance management. The right fundamental activities need to be in place first.
Integrate Performance Management with Other Talent Management Elements

Talent-management elements should reinforce one another as much as possible. For example, Wayne Farms new competency model is used for recruiting, succession planning and development. Managers keep succession management in mind when creating their employees individual development plans.
Lessons Learned
During the course of its performance-management transformation, Wayne Farms learned a number of important lessons. To start, relationships with leaders throughout the business were critical. Those relationships provided
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the grease on which the performance-management transformation glided without them, the improvement process would have ground to a halt. Leaders identified problems much earlier and helped improve the entire process because of the relationships the VP of HR and his team had built. Wayne Farms also learned the importance of having strong HR leaders who could truly serve as business partners. If HR was going to design and implement improved performance-management activities that business leaders would use, those same leaders had to respect HR. The team at Wayne Farms worked tirelessly to upskill and upgrade the HR function, putting in place people who would ensure that the day-to-day work of HR got done, while the HR organization also performed as an effective business partner. Finally, the team recognized that not all challenges were process-based some were structural. It was for this reason that the VP of HR adjusted the HR organizational structure at the beginning of the transformation. This allowed him to create a middle level of managers to handle some of the more pressing daily issues, allowing him to think strategically from a big-picture perspective. Those mid-level managers were indispensable in providing the VP of HR with the data and insights he needed to set the vision for the HR function and the company.
Conclusion
In crafting a vision for performance management at Wayne Farms, HR leaders drew heavily on well-known principles and best practices. This is heartening for other HR organizations, as it shows there is often no need to start from scratch in developing transformative plans. What is most outstanding about the approach taken at Wayne Farms is the way leaders customized those principles and ideas into an action plan that worked for this company. Very early in the process of deciding where performance management at Wayne Farms needed to go, HR leaders gave thoughtful consideration to the appropriate pace for change. They implemented transformation at a manageable and sustainable rate. Importantly, they followed through on what they started at each stage, but did not lose sight of their ultimate goals. Wayne Farms has transformed performance management from a process that was rudimentary at best to an effective method for managing people. Though Wayne Farms will certainly continue to improve performance management, its results so far are impressive indeed.
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Appendix I: Overview of Wayne Farm's Performance Management Cycle

Figure 10: Wayne Farms Performance Management Cycle
APR-MAY A. Employee Self Assessment And Performance Reviews Completed On Prior Years Results B. Goals finalized for all employees FEB MAR A. Informal Performance Coaching (Ongoing) B. Goals developed for new fiscal year
JUNE A. Individual Development Plans Created B. Focal Point Merit Planning Begins
JANUARY 3rd Quarter Individual Performance Feedback
JULY 1st Quarter Individual Performance Feedback
NOV - DEC Informal Performance Coaching (Ongoing)

OCTOBER Mid-Year Individual Performance Feedback
AUG SEPT A. Succession Plan Development begins B. Informal Performance Coaching (Ongoing)
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Appendix II: Wayne Farm's Competencies List of Competencies

Individual Contributor
Description: Motivated by accomplishing a task; builds effective personal relationships; meets personal due dates for short-term projects by managing own time; gets results through own skills; performs high-quality technical or professional work within own job scope; accepts company values; not satisfied with doing things the way theyve always been done. Competencies: Functional/technical skills has the functional and technical knowledge and skills to do the job at a high level of accomplishment. Action orientation enjoys working hard; full of energy for things seen as challenging; seizes more opportunities than other people. Problem-solving uses rigorous logic and methods to solve difficult problems with effective solutions; excellent at honest analysis; looks beyond the obvious and doesnt stop at the first answers. Learning on the fly learns quickly when facing new problems; a relentless and versatile learner; open to change; analyzes both successes and failures for clues to improvement; experiments and will try anything to find solutions; enjoys the challenge of unfamiliar tasks; quickly grasps the essence and the underlying structure of anything. Interpersonal savvy relates well to all kinds of people up, down and sideways, inside and outside the organization; builds appropriate rapport; builds constructive and effective relationships; uses diplomacy and tact; can diffuse even high-tension situations comfortably.
Sample titles: Accounting clerk, safety & health technician, lab technician
Leader of People
Description: Plans projects, considering budget and workforce; selects people; delegates tasks and responsibilities to others; provides coaching and feedback; rewards and motivates; builds relationships with others up, down and sideways in organization; makes time available for subordinates (at both leaders and employees request); gets results through others; responsible for success of direct reports and for the team overall; visibly demonstrates integrity.
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Competencies: Sizing up people is a good judge of talent; after reasonable exposure, can articulate the strengths and limitations of people inside or outside the organization; can accurately project what people are likely to do across a variety of situations. Delegation clearly and comfortably delegates both routine and important tasks and decisions; broadly shares both responsibility and accountability; tends to trust people to perform; lets direct reports and others finish their own work. Planning accurately scopes out length and difficulty of tasks and projects; sets objectives and goals; breaks down work into the process steps; develops schedules and task/people assignments; anticipates and adjusts for problems and roadblocks; measures performance against goals; evaluates results. Customer focus is dedicated to meeting the expectations and requirements of internal and external customers; gets first-hand customer information and uses it for improvements in products and services; acts with customers in mind; establishes and maintains effective relationships with customers and gains their trust and respect. Conflict management steps up to conflicts; sees them as opportunities; reads situations quickly; can find common ground and get cooperation.
Sample titles: Production supervisor, accounting supervisor, feed mill supervisor, sanitation supervisor
Leader of Leaders
Description: Selects and trains lower-level managers; holds managers accountable for managerial work; deploys/redeploys resources among teams; manages the boundaries that separate teams that report directly to the manager from other parts of the business; responsible for two or more levels of salaried employees. Strategic agility sees ahead clearly; can anticipate future consequences and trends accurately; future-oriented; has broad knowledge and perspective. Business acumen knows how businesses work; knowledgeable in current and possible future policies, practices, trends, technology and information affecting his/her business. Building effective teams blends people into teams when needed; creates strong morale and spirit in his/her team; fosters open dialogue; creates a feeling of belonging in the team. 27
Customer focus is dedicated to meeting the expectations and requirements of internal and external customers; gets firsthand customer information and uses it for improvements in products and services; acts with customers in mind; establishes and maintains effective relationships with customers, and gains their trust and respect. Command skills relishes leading; takes unpopular stands if necessary; encourages direct and tough debate but isnt afraid to end it and move on; is looked to for direction in a crisis; faces adversity head on; is energized by tough challenges.
Sample titles: Production superintendent, shift manager, QA manager, operations manager, complex manager, area manager, vice president
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Appendix III: Topics for Discussion and Learning

The following sections will provide you with considerations for sharing and implementing the best practices that were highlighted in this report.
Key Learnings
Below is a list of key learnings (the gems) from this case study. 1. It is critical to assess a companys situation and culture prior to pursuing any major change. That assessment will help to determine the type of change thats best and the speed at which it should happen. It is important not to push the change faster than the organization can accept. 2. Changes to any talent-management process require substantial support from senior leaders, starting with the CEO. To build that support, the HR organization must be seen as a credible and respected partner that can deliver effectively on its responsibilities. Further, HR needs to work to understand the business and its challenges before suggesting any new solution. 3. Each step of a performance-management transformation should build on the one before. The organization should focus on putting in place the right behaviors and activities before adding additional complexity. 4. Organizations should not assume that managers know how to effectively manage employees. Its important to provide increasingly sophisticated development opportunities that enable managers to have difficult conversations, to discuss the link between performance and pay, and to provide coaching. 5. Identifying top and bottom performers is critical. Find new ways to do it if managers are not effectively differentiating performance with current tools and processes.
Ideas for Action

Below is a list of actions that you can take in order to apply or implement the best practices highlighted in this report. These are some of the foundational elements that we highly recommend be in place inside your company in order to execute such a plan, process or program. 1. Spend time with business leaders to identify the business problems to which performance management would be a good solution. Performance management the coaching, feedback and development components in particular need to address leaders most pressing concerns.
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2. Assess how performance management is executed currently, beginning with goal-setting and ending with rewards. Identify where it breaks down. Do managers coach and provide feedback to employees on an ongoing basis? Do managers assess employees fairly? Are performance results and rewards differentiated? 3. Create a vision for world-class performance management that fits your organization. Give careful consideration to your organizations culture. Begin to identify first steps that should be taken to implement this vision. 4. Find influential leaders who will support your efforts in upgrading performance management. Rely on them throughout the design and roll-out of the new performance-management activities. 5. Design a change-management process that builds on itself, starting at a very foundational level. This often means driving compliance first, and then improving the activities within performance management. For employees, start with training that introduces them to performance management, increasing the complexity of performance-management concepts over time.
Questions to Consider
Below is a list of discussion questions that you can ask your team, colleagues and business leaders, which will help you to take the next steps. 1. What business issues are we facing today that would be solved if we had more effective performance management? How would improved performance management and improved employee performance address those issues? 2. What is not working with performance management? How much of this is a result of a weak HR team, versus weak manager skills, versus weak performance-management activities? 3. What cultural barriers will we face in transforming performance management? What steps will we need to take to overcome them? 4. Which senior leaders will we most need to support the transformation of performance management? In what ways can we engage them in the design and roll-out of new activities? 5. What would effective performance management look like for our organization? What activities would take place? What outcomes would we see? What metrics would show success?
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Appendix IV: Table of Figures

Figure 1: Wayne Farms at a Glance Figure 2: Phases of Wayne Farms Performance Management Transformation Figure 3: Wayne Farms PM Transformation Timeline, Phase 1 Figure 4: Wayne Farms PM Transformation Timeline, Phase 2 Figure 5: Wayne Farms PM Transformation, Phase 3 Figure 6: Competencies and Accountability Levels at Wayne Farms Figure 7: A Shifting Balance Figure 8: Wayne Farms PM Transformation Timeline, Phase Figure 9: Wayne Farms Reduction in Hourly Turnover 2003 Versus 2010 Figure 10: Wayne Farms Performance Management Cycle 6 10 11 13 14 16 17 19, 20 22 25
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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.
About This Research

Copyright 2011 Bersin & Associates. All rights reserved. WhatWorks and related names such as Rapid e-Learning: WhatWorks and The High-Impact Learning Organization are registered trademarks of Bersin & Associates. No materials from this study can be duplicated, copied, republished, or reused without written permission from Bersin & Associates. The information and forecasts contained in this report reflect the research and studied opinions of Bersin & Associates analysts.
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CASE STUDY CASE STUDY

BERSIN & ASSOCIATES

Overhauling Performance Management

IN THIS CASE STUDY

OVERHAULING PERFORMANCE MANAGEMENT

OVERHAULING PERFORMANCE MANAGEMENT

The Bersin & Associates Membership Program

OVERHAULING PERFORMANCE MANAGEMENT

OVERHAULING PERFORMANCE MANAGEMENT

About Us About This Research

OVERHAULING PERFORMANCE MANAGEMENT

Figure 1: Wayne Farms at a Glance

OVERHAULING PERFORMANCE MANAGEMENT

OVERHAULING PERFORMANCE MANAGEMENT

The Performance Management (PM) Environment

OVERHAULING PERFORMANCE MANAGEMENT

The Three Phases of Performance Management Transformation

OVERHAULING PERFORMANCE MANAGEMENT

Figure 2: Phases of Wayne Farms Performance Management Transformation

Phase 1: Creating Consistency 20032004

Phase 2: Building the Foundation 20052006

Phase 3: Modernizing Performance Management

Source: Wayne Farms LLC and Bersin & Associates, 2011.

Phase 1: Creating Consistency (2003-2004)

OVERHAULING PERFORMANCE MANAGEMENT

January 2003 October

Phase 2: Building a Foundation of Accountability and Teaching Key Concepts

OVERHAULING PERFORMANCE MANAGEMENT

The Learning Link

OVERHAULING PERFORMANCE MANAGEMENT

March April/May 2005 April July December March April

OVERHAULING PERFORMANCE MANAGEMENT

Phase 3: Modernizing Performance Management (2007-2011)

Figure 5: Wayne Farms PM Transformation, Phase 3

Identifying Key Behaviors

Developed new competency model (2007) Implemented competency model (2008)

Automating and Adding Mid-Year Reviews

Introduced SuccessFactors Performance Manager technology Introduced optional mid-year reviews

Advancing Managers Skills

Driving Performance Differentiation

Source: Wayne Farms LLC and Bersin & Associates, 2011.

Identify Key Behaviors: Redesigning and Realigning Competencies

OVERHAULING PERFORMANCE MANAGEMENT

OVERHAULING PERFORMANCE MANAGEMENT

OVERHAULING PERFORMANCE MANAGEMENT

Automating Performance Management and Adding Midyear Reviews

11 SuccessFactors is a global provider of business-execution software solutions. Learn more at www.successfactors.com.

OVERHAULING PERFORMANCE MANAGEMENT

Advancing Managers Skills

OVERHAULING PERFORMANCE MANAGEMENT

OVERHAULING PERFORMANCE MANAGEMENT

March 2010 October

OVERHAULING PERFORMANCE MANAGEMENT

OVERHAULING PERFORMANCE MANAGEMENT

Figure 9: Wayne Farms Reduction in Hourly Turnover 2003 Versus 2010

60% 25% decrease

Source: Wayne Farms LLC and Bersin & Associates, 2011.

Phase in Change at a Manageable Rate

OVERHAULING PERFORMANCE MANAGEMENT

Link Performance Management Improvement to Business Impact

Get the Activities Right before Automating

Integrate Performance Management with Other Talent Management Elements