A KEY GLOBAL INITIATIVE

“I use Performance Measurement and Management as a core management tool for myself and my direct reports, and I firmly believe we must all see PMM not just as a year-end review process but as a way to manage our individual performance and direct it in the most effective and efficient ways”. – Peter Wuffli, Group Chief Executive Officer

UBS refers to Performance Measurement and Management as Managing Performance. The turning of the phrase reflects the use of the process as a key global initiative that has helped the company attain record growth in the last few years. The company is comprised of four business groups: a leading global wealth manager, a top tier investment banking and securities firm, and one of the largest global asset managers. It’s headquartered in Zurich and Basel, Switzerland, and the 78,000 employees are in 46 countries.

The company recognizes that managers today face a fundamentally different set of challenges when it comes to encouraging and rewarding performance and is addressing them in their PMM process.

These changes include:

• Flattening of the hierarchy
• Broader span of control for managers
• Increased organizational complexity
• More self-directed knowledge workers
• Increased drive towards transparency

The current PMM process was initiated after a survey of existing processes revealed that there was little commonality between the performance management processes of the business groups, and as many as 16 different competency models. This prevented the company from focusing on rewarding actions and behaviors that would lead to business performance improvement.

Today, PMM is an essential tool to make the business strategy an operational reality.

Performance Management:

• Translates the strategy into every employee’s business and professional goals
• Provides an objective basis for performance assessment and development
• Helps to develop talent
• Creates a framework for continuous dialog Is the underpinning of the firm’s culture of meritocracy

The organization focuses on defining the right objectives that contribute to further growing the organization. Employees are rated on both their contribution – what they do – and their competency – how they do it. PMM is, as Peter Wuffli says, much more than just a review an objective-setting tool. It roots the culture and values in everyday actions of each employee in a constant, meaningful dialog between employees and their managers each year.

The Process

Goals are cascaded from the top-down starting in January. Individual goals are set around both what and how. Contribution (What) measures how well the individual meets the objectives defined for their position, using a 5 point rating scale. Competency (How) describes the key behaviors for each role. The five-point competency scale is alphabetic and goes from a to e. The browser-based PMM tool is a robust engine that enables managers and employees to quickly see objectives, individual competencies, etc., related to job profiles so that relevant, meaningful goals are created.

The PMM engine enables managers to review and enter performance reports whenever they need or want to. All of the appraisals are stored. In addition, individuals can use the system to initiate 360-degree reviews that are also stored; managers are encouraged to consider those as part of a final rating process. Sometime in the October-December timeframe, managers have to formally rate their employees, and are required to have a face-to-face discussion about those ratings.

Quality and Consistency

The quality of the appraisal is important at UBS, because without consistent appraisals across the enterprise, PMM can’t be the corporate-wide enabling tool that drives performance. Consistency provides the ability to increase the value of the assessment so that the strengths and weaknesses throughout the company are easily viewed, and can be used for compensation, succession planning, high potential identification and more.

In an effort to measure the quality of the appraisal, a random sample of employees is surveyed every two years. They are asked if they believe the process is fair and whether or not they understand their rating. In trying to determine the drivers of perceptions of fairness, the results show that the quality of dialog between managers and employees plays a key role.

The company is working to make the process even more effective by improving the quality of the assessment information, particularly as it relates to competencies and gap analysis.

For more Performance Management-related information, visit performance.corpu.com.