Goal Oriented

Seagate has made sure employees know it's a process not to be taken lightly. The company started collecting goals in June and continued to do so until December. Every few weeks, it sent out a list of people who hadn't submitted their goals. "The first couple of months, after sending out the status, there was a flood of activity of people just wanting to get their names off the list," Hanlon says. "We needed to establish early on that this is a process that matters." By December, the company had collected goals from 97% of its professional employees, and 93% had submitted plans for achieving them. As business conditions change, so can objectives, so employees can update them quarterly.

Seagate has had to face cultural issues with its approach. "In Asia, they asked, 'Why can't we just give people their goals?'" Hanlon says. The company's challenge with the process, which is supported in multiple languages, is getting managers and employees to work together. "We know the first year will be a learning curve for all of us," Hanlon adds.

For the future, Seagate wants to marry data from its enterprise resource planning systems into its performance-management system so, for example, data on the results of on-time deliveries can be correlated with the employees who manage deliveries. Online reminders could tell employees they're missing delivery dates, pushing goals off track. In such a scenario, business processes truly become aligned with workplace performance. "We're a year or more away from a capability to really integrate that data," Hanlon says.

Baxter's Katt also sees value in the idea--to an extent. "In the future, I can see tying manufacturing goal-setting into the supply-chain system," Katt says. But, she adds, "we've all gotten a little wiser about the idea of this one, mammoth ERP system that rules the organization." The payoff for such a project, she says, would have to be clear.

As it is, it's difficult to show a return on investment from performance-management software, such as a direct link to improved revenue, lower operating efficiencies, or even a higher employee-retention rate. But for Seagate and Baxter, employee feedback has been positive, and executives are pleased with the process. Goals are visible and dynamic, rather than collecting dust in a manila file until the next review process.

At Textron Inc., which uses Performance Manager by SuccessFactors Inc., the performance-review process carries more meaning than before, people are happier with it, and there's an overall sense of improved communication at the aircraft manufacturing and financial-services company, says Steve Ostiguy, manager of organizational performance for company division Textron Financial. Those are benefits that can't be measured with hard numbers. "In theory, you should tell employees what you expect of them from day one," he says. But companies usually don't do a good job of that. "Now we have a formalized and very specific process and practice for it. Employees know exactly what their objectives are and how they relate to business units and, ultimately, the entire enterprise."

Textron Financial started using Performance Manager for its 1,200 employees more than two years ago, and the parent company rolled the system out to all its 35,000 U.S. employees over the past year. CEO and chairman Lewis Campbell published his goals in early January, and the business-unit heads completed their objectives in February. Employees have until the end of the month to complete their objectives for the calendar year.

When employees are reviewed in a year, three quarters of their evaluations will be based on how well they achieved their objectives and a quarter on the success of their development plans. The company uses a rating scale of 1 to 5 to determine the percentage of merit increases. Textron's 15,000 international employees use a paper version of the system but will start to go online next year as the company rolls out multilanguage versions of the software.

That's a big IT commitment for an HR process. But it's worth noting that Baxter, Seagate, and Textron performed well in their most recent financial quarters. In the case of these three companies, at least, the all-too-common claim, "Our people are our greatest asset," is more than a worn-out cliché.

Illustration by John S. Dykes