© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management CONFIDENTIAL. This document contains trade secret information. Disclosure, use or reproduction outside Cargill or inside Cargill, to or by those employees who do not have a need to know is prohibited except as authorized by Cargill in writing. © 2013 Cargill, Incorporated. All rights reserved. Engaging for Performance: How Cargill transformed Performance Management to Drive Employee and Customer Engagement MPPAW January 19, 2016 Roxanne M. Laczo, PhD Global Talent Analytics, Employee Experience, Recognition, and Performance Management Lead

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management The Case for Change 2

3 Changing External Environment Changing Internal Environment  Financial crisis  External markets changing rapidly  Customers becoming more demanding  Competitors becoming more agile  Employees demanding more  Increasing need to be more agile  Focus on creating value for customers and  Focus on generating sustainable profits  Increased emphasis on physical and emotional safety  Increased urgency and higher performance necessary and expected The Need for Change

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Performance Management Challenges

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Cargill Internal Studies (2011) 5

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Cargill Performance Management Study IN RESPONSE TO STRATEGIC PRIORITIES Key findings Major disconnect between PM and daily work Managers are reluctant to give candid feedback Managers view PM as an administrative drill 6 Our Opportunity Simplify Performance Management Process & Requirements Focus on Everyday Performance Management behaviors & practices Strengthen Manager Capabilities

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Everyday Performance Management Principles 7

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Principles of Effective PM WE COINED 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 8

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Align PM Approach to Cargill’s Strategic Priorities 9 Become more agile Reduce complexity and simplify processes Focus on everyday activities and practices Focus on creating value to our customers and generating sustainable growth

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Shifting from Annual to Continuous 10 Top down Annual Top-down, cascading goals Annual event, highly administrative Focused on ratings HR driven process Continuous management & feedback Aligned, flexible local goals Ongoing discussions, simplified process Focused on continuous improvement and development Manager/leader-driven

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Key Decision: Remove Ratings 11

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Why a ‘no rating’ approach? Research shows that most employees are dissatisfied with performance reviews. Unintended consequences of assigning performance ratings: people feel undervalued, de-motivated, and disengaged. Focusing on ratings often overshadows the year-end discussion and the opportunity to provide feedback and discuss development. Removing ratings shifts the focus away from a potentially defensive mind set towards a more constructive dialogue between managers and employees that results in development and performance improvement. Removing ratings simplifies the process and encourages employees and managers to focus on what matters the most (e.g., day-to-day PM practices and behaviors). 12

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management The Unreliability of Performance Ratings 13 Assumption: Managers provide reliable and valid ratings of their employees. Reality: Manager’s are notoriously unreliable in providing useful, accurate ratings of their employees. Idiosyncratic Rater Effect: 61% of a rating of is a reflection of the rater, not the ratee. With enough training and time, managers can become reliable raters of their employees, however we rarely invest the time and effort into doing so. Source: Most HR Data is Bad Data. Marcus Buckingham, HBR 2015

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management No-Rating Pilot ( ): What we Learned 14 More than 90% of pilot participants reported, year after year, overall positive experience with a no-ratings approach. One strong theme: manager’s skill in delivering qualitative feedback is critical to the success of a no-rating evaluation. Employees who had a good experience with no ratings attributed it to the enhanced quality of the manager’s comments and/or the performance discussion between the manager and employee. On the other hand, employees who a bad experience had attributed it to poor goal setting, confusing performance reviews, and lack of clarity about how they were doing.

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management Manager Capability is Key 15

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management 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 Measure, measure, and measure… 16

© 2013 Cargill, Incorporated. All rights reserved. Everyday Performance Management