IBM: the transparent culture of performance management, part 01

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The company culture of IBM is respecting every individuals, pursuing excellence, igniting their passion, and getting high performance. In IBM Company, when talking about performance assessment, people always say that performance says.

PBC centered performance assessment framework

IBM’s performance assessment framework runs on a kind of project named as PBC (personal business commitments), and this is the center of the framework.

The framework is built based on a series of performance managing targets, there’s no difference with other cross-country companies who run performance management well.

PBC is a performance managing system. All IBM staffs have to set their goals (personal business commitments) according to the value principles of drive to win, execute quick and team spirit. Every staff needs to make his PBC by a good understanding of company’s business target and detailed KPI with the help and guide of department manager, also, list the actions to be taken in the next year to realize these business targets, executive plans and team works. This can be seen as signing a one-year performance contract between company and staffs.

Making PBC is an interactive process through the communication of individuals and their report manager or director, it’s not a simple breaking down of missions or execution of superior orders. This practice can make staff’s personal business target merged with the target of the whole department, and then with the whole company, improve the individuals’ feeling of getting part in the overall business, put every job’s responsibility into effect and arouse the passion, and at the same time, it guarantees the targets can be implemented fully. So as to get a high rate of PBC assessment, you have clearly to know your department goal, catch the point of your tasks, bring the advantage of team work into fully play, and emphasize the importance of practical actions.

The 3 commitments can be explained as follows:

The 1st commitment: committed to win. Wining market position, high efficiency, quick response and accurate execution, team work advantage and getting favorable situation. The commitment requires members to seize all chances that lead to success, encourage themselves and the whole team, and do the best to win market shares, realize sales target and other important performance assessment index. Everyone ask themselves to implement the commitments they made in PBC, no matter what kind of difficulties they met, they have to strike forth. Because everyone knows that success is the first, reaching the target is most important.
Company cannot avoid facing huge pressure in a competitive environment, so as a reality, stockholders care about the business result most, that means return of investment and the stock price, the stock market reflects the business performance subjectively. Failed in reaching its committed goals, director board will never let managing team and CEO feel OK. Therefore, the faith to win and the practical execution of self target is pretty important.

The 2nd commitment: committed to execute. In IBM, 3 words are always emphasized, they’re execute execute and execute, it dose not only need plan target and commitment, it need execution. Execution is a process which tells the performance of staffs, the improvement of business flow and enhancement of executive ability.

The 3rd commitment: committed to work as a team. It’s that different unit and department work together cooperatively and communicatively within the same business goal. IBM uses a very mature matrix organization structure, it’s quite often that a project or business will involve lots of departments, in such condition, cross-departments communication and cooperation is necessary for bringing the teamwork advantage into effect. For example, if one team of IBM meets a technical problem, it’s not unusual that headquarter send a support team which maybe consists of members from different countries. This shows IBM’s global teamwork well, if you get problem, the help you get thereafter may come from all over the world’s IBM business units and colleagues. Doing jobs by oneself is not a good way since there’re great deal of things that oneself cannot accomplish, those need oneself learn to take teamwork as the start line and working customers of considering a question.

In a word, IBM’s performance managing mode needs every staff clearly understand company and his department business goal, catch the point of jobs, bring teamwork into play and practically execute.

The Role of PBC assessment

The PBC assessment method is meaningful to common staffs, because the outcome of PBC dose not only directly relate to staffs’ bonus assignment, salary adjustment, but also take great effect in future career development, for example, promotion. To people manager who responsible to managing tasks, employee opinion survey, executive interview and the feedback of open door policy are added to PBC assessment, which are taken as supplementary figures of performance assessment. When taking PBC assessment, defining managing staff’s responsibility also includes: if you’re a manager, it’s better to ensure the contribution staffs has made to company and department, and pay close attention to balance resources, keep the entire team’s passion and behave fair, never do any kind of decisions with prejudice.

The common way of PBC assessment is initially done by direct manager based upon staffs’ job result, and then adjusted overall by higher manager. Every staff has to summarize at the end of a year, and discuss the summary face to face with his direct manager (report manager). Different assessment result will decide different payment: A lvl staff (PBC1) will get the largest bonus and salary adjustment in the next year. B lvl (PBC2) are the ones who successfully finished their jobs, and due to the standard procedure, will get corresponding bonus and salary adjustment. C lvl (PBC3) are seen to need improvement. D lvl (PBC4) is the one who failed in reaching the target because kinds of reason. From an historical angle, 70% IBM people can accomplish their yearly assignment while only 15% exceed or fail.

See from its assessing standard:

1. PBC1: excellent
2. PBC2+:
3. PBC2:
4. PBC3:
5. PBC4:

See from a practical angle, most staffs can reach the requirement of PBC2.

The figured dealing method of performance award and punishing

In IBM, year end bonus depends on company’s business performance added by personal performance. Calculating personal business performance, different PBC result will be handled like follows: PBC1, 150%; PBC2, 100%; PBC3, 80%; PBC4: 0%.

The PBC result is relevant to both personal performance and whole company’s performance. Encouraging staffs pay more attention to the success of company’s operation is the reason of doing so. Company’s performance can be measured by the following 5 index, and their weighted differently.

1. Sales revenue, 20%
2. Profit, 25%
3. Inventory turnover, 15%
4. Product quality, 20%
5. Client satisfactory, 20%

To different band (level) staffs, the percent of effect personal performance plays against company performance plays in year-end bonus can be different. Generally speaking, to high level staff’s, the percentage of risky income in yearly income is higher. While to basic level staff, basic salary income places the most important. That is to say, high level staff takes larger responsibility to the company, so the company’s performance means more. On contrary, basic level staff’s personal performance plays more important role in deciding the year-end bonus. In a word, who performs better, who brings more contribution to the company, will get higher year end bonus.
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Destiny willed.