Performance Management Transformation: Cargill’s Case Study Sharon Arad, Ph.D. Performance Impact Solutions CEB

Organizations Want to Improve Performance Management Traditional Performance Management Illustrative Everyday Performance Management Illustrative High Reviews Decisions High Goals Activity Level Activity Level Low Low Begin Cycle End Cycle Begin Cycle End Cycle Focus on process not people Formal and event-driven Separate from work 3–5% impact on performance Focus on people not process Informal and ongoing Integrated with work Up to 39% impact on performance Source: CEB 2012 High Performance Survey. Source: CEB 2002 Building the High-Performance Workforce Survey. © 2015 CEB. All rights reserved.

What the Best Companies Are Doing 1 2 3 Improve Expectation Setting Build a Culture of Coaching and Feedback Simplify Performance Reviews Stop Stop Stop Setting SMART goals just once a year Limiting feedback to once or twice a year Requiring extensive and complex documentation Start Start Start Engaging in more dynamic and flexible goal-setting Teaching managers to give ongoing, informal feedback Streamlining documentation to the minimum required © 2015 CEB. All rights reserved.

Cargill’s PM Transformation: Case Study

Aligning PM Approach to Cargill’s Strategic Priorities Cargill's complex external environment was changing more rapidly and requiring the company to change the way we work Become more agile Reduce complexity and simplify processes Focus on creating value to customers and generating sustainable growth

Cargill Performance Management Study Key Findings Major disconnect between PM and daily work Managers are reluctant to give candid feedback Managers view PM as an administrative drill Our Opportunity Simplify Performance Management Process & Requirements Focus on Everyday Performance Management behaviors & practices Strengthen Manager Capabilities

Adopting a New Mindset Old Mindset New Mindset Annual, backward-looking reviews Frequent, future focused conversations Rule-based; focus on compliance Principle-based; focus on empowerment Focused on ratings Focused on continuous improvement and development Prescriptive processes Flexible, on-demand tools and resources Managers micromanaged by system Capable managers trusted and expected to do the right thing HR-driven process Manager-employee driven

1 4 2 3 5 Everyday Performance Management Simplified process with fewer administrative requirements and streamlined performance plan and documentation No Rating approach with focus on qualitative assessment of the employee achievements, contribution to business success and development opportunities Focus on ongoing discussions between managers and employees; informal feedback, coaching, and goal review and adjustment Simplified and flexible goal setting with fewer, more dynamic goals aligned to business strategy and tailored to the specific job and businesses requirements Cargill Leadership Model is the standard for how goals are achieved 1 4 2 3 5

Principles of Effective PM The new mindset Everyday Performance Management that was built on a few foundational principles Effective PM is an ongoing process Day-to-day PM activities and practices predict the quality of PM Employee-manager relationships are at the heart of effective PM PM processes need to be flexible to address different business needs

Performance Discussions How often? Not prescribed; real-time, ongoing, and future focused performance discussions between managers and employees. Who initiates? Who’ is accountable? Manager How much structure and standardization? High level guidelines What topics to include? Each discussion should include goal alignment, goal progress, feedback, and goal adjustment. Over the course of the year, managers should provide feedback and coaching and discuss performance goals, leadership behaviors, career aspirations. How much documentation? Documenting conversation comments is encouraged. Use of technology Simplified, home-grown technology that serves as a notes depository for employee's and managers.

Integrating the Coach Approach

Lessons Learned Linking the transformation to strategic priorities Importance of executive champion and key advocates The power of a successful pilot Educating and preparing the HR function Partnering with Compensation Team Focus on role and capability of managers Continue to align with changing business and strategic priorities