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By Omar Aguilar
Best Practices of the Building Blocks of an Integrated Business Planning Process
Design of an effective reward system parallels the integrated planning cycle. General reward objectives are identified-during the creation of performance measures-and performance is rewarded during results reporting and assessment. Implementing a new reward system, especially one that alters the performance culture, usually takes several review cycles to have its full impact on individual behavior. In most companies this means that the entire journey may take several years.
With their superior planning, measuring, and forecasting, best- practice companies can readily identify the divisions, units, departments, and individuals that are getting the best results and reward them accordingly. In such companies, individuals know their goals and priorities. They are empowered to achieve these goals and are held accountable for the results.
Three years ago, Georgia-Pacific recognized that its processes for reviewing and managing performance were cumbersome and, more important, did not always provide a clear link between employee activities and the goals of the organization. To restructure its performance management systems, the company designed a database, accessible to salaried management online and in real time, that defines a standard competency set applicable to all employees. The Georgia-Pacific strategic planning process generates company goals and measures that are set in January and then cascaded to all levels of the organization. The new performance management process then links these organizational objectives to individual performance targets, establishing a clear link between objectives and daily employee activities.
IBM, with some 300,000 employees worldwide, uses its Personal Business Commitment (PBC) performance management system to clearly link employee activities to corporate objectives. The idea is to first gain alignment throughout the organization and then to align the company's objectives with the activities of individual employees. By providing access to a competency database that reflects and then ties compensation targets to performance, PBC helps the organization understand each individual's unique contribution to achieving the corporate objectives and reward employees accordingly. Managers can clearly see what is expected of their staff, how to measure those activities, and how to tie them to the company's objectives. This kind of empowerment and accountability motivates people not just to do their best but also to focus their energies on doing what is best for the company.
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