Reality HR: Sheree Herr of AEIS, on Building A Top Performing Culture

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Sheree Herr, Vice President, Employee Development and Human Resources of American Express Incentive Services and her team are responsible for driving AEIS´s high performance culture initiatives and directing corporate human resource activities.    

In particular, Sheree is charged with inspiring an internal culture of recognition as well as serving as a recognition expert to AEIS clients, vendors and the community. She also directs and manages the activities of AEIS´s legal management function, which includes legal research, regulatory compliance and contract administration.

Before she joined AEIS, Sheree was employed for seven years with Angelica Corporation where she initially served as Director of HR and was later appointed to manage and direct retail school uniform sales as the Director of Marketing and Sales for Angelica Image Apparel.

AM: Sheree, you work with a team that is dedicated to driving high performance culture initiatives. Can you give us a bit of a background about your team and your role within the team?

SH: We are a very small organization. We have about 130 employees and about $550 million in sales. When I first came to the organization about three years ago, there wasn´t really an HR department. I am responsible for managing all of our employee development and HR activities. We separate those two because we feel that there are distinct competencies that each team member brings to those areas. I have two HR generalists reporting to me and they have a lot of typical HR responsibilities, but when it comes to driving a high performance culture they really focus their efforts on recruiting and compensation. Along with them I also have a director of employee development and a training manager and they are responsible for issues around performance management, training, leadership development, recognition and career management. Typically, I handle most of our succession planning activities as well as our organizational communication strategy.

One of the things that I wanted to emphasize is that although my team plays an important role in developing and facilitating our high performance people initiatives, it is really our management team who play the role of implementing these initiatives in the organization. Without them we would not have been successful over the last couple of years.

AM: You´ve spoken about the importance of the adoption of a clear business objective to building a high performing culture. Do you have any recommendations for others around how to gain support for this kind of initiative?

SH: People often ask me how I define a high performance organization. A lot of organizations really struggle with that. My immediate response is that it is unique to each organization based on your performance objectives and who has a say in what they are. Where are you today and where do you want to be in three to five years based on your business planning cycle? When we started talking about high performance it really was at the senior management level. Having top management engaged in that discussion is key. We really looked at what it meant for us. We looked at past and current success, past and current failures, best practices in the incentive industry and we started to think about what that definition would look like.

We said that we wanted to see double-digit growth in top-line sales and bottom-line profits in five years so that we are a $1 billion company by 2009.

We feel like everything we do ultimately needs to align with that high performance definition and objective. We have three areas where we focus: driving profitable growth, delivering customer value and fostering a high performance culture. We took this last area one step further and defined culture. For us, it is a combination of the people that we hire, develop and retain and the work environment that we create. Almost everything that my team does has to revolve around hiring, developing, retaining and creating a culture that drives us towards meeting this business objective of top line and bottom line growth.

AM: Once that overarching vision or direction has been decided upon, what would be the next step you would suggest?

SH: We developed a model that really captured what we thought were the critical components to focus on to develop that high performing culture. There is a lot there so we are taking a phased approach that will take place over the next three to five years. We talked about how we recruit and hire people, how we manage performance on an ongoing basis, how we train and develop people, how we integrate career development and succession planning, how we reward and compensate people, how we recognize people, how we build our leaders, how we communicate across the organization and we talked about how we would design the organization from a structure standpoint and how we would align the organization. We particularly looked at how we could establish our goals all the way from the top down and across the organization to make sure clear alignment was there.

The very first thing that we did when we made the decision to drive a high performance culture was to define what that meant. We defined what that meant for people at different levels within the organization. We did that by further refining our competencies - the skills, knowledge and behavior that we felt were necessary to drive a high performance organization. We had existing competencies for each level within the organization and we went out and did a lot of best practice research on high performing companies and we had a lot of internal discussions to further refine those. Each level within the organization, from the senior management team down to the individual contributor, has a set of high performance competencies. At the executive level those competencies are things like strategic focus, leadership ability and communication. We took those competencies and we integrated them throughout our model. We started to recognize the kinds of people that we wanted to recruit and hire. We need to be talking to people throughout the year about how well they are demonstrating their competencies and we need to be training around the gaps in those competencies.

AM: When you were going through the process of identifying competencies, how much involvement did you have from the employees?

SH: We had a good deal of involvement from all levels. We painted a picture for them of where we wanted to be in the next three to five years. We gave them information about strategy, what was going on in the marketplace and then we asked them to think about what they needed to be doing tomorrow. We asked them what skills, knowledge and behaviors were critical to get to where we want to go. That got them thinking out of the box. That was a little bit of a struggle because people always want to look back instead of forward. When we continued to press it and talk about it we had some very good feedback.

AM: Could you tell us a bit about the communication strategy that you had?

SH: It was very top down. We spent two years before we even went down to the individual contributor level, working with our managers and our directors. It is so critical to get them aligned with where the organization is going and get them prepared. When we started developing an organizational communication strategy we recognized that those were our key communicators. Any time that we have all employee communication events, which we do on a monthly basis, we always talk to our leaders first. We give them more detail about what we are going to talk about, we get them comfortable with what we are going to be communicating, we get their buy in and we get their questions answered. Sometimes they give us great feedback on how to communicate some things. The reason that we use them as the primary communication vehicle is because they are the people that are running the day-to-day business and are fielding most of the questions. From a communications perspective, if we are not sending the same message as top management there is a lot of confusion and even a lack of credibility within the organization. We build a combination of management communication and all employee combination and then we pick certain vehicles to communicate that message depending on the issue. We may use email, voicemail or face-to-face communication depending on the nature and sensitivity of the issue. We tend to be very honest with our employees about the business and whether we are having success or challenges. We find that our employees tend to react better and it builds a better degree of organizational trust around how we are running the business.

AM: I would think that allows you to ensure that development is more targeted. Could you speak further about that?

SH: What we did in the beginning at the leadership level and the individual contributor level was an assessment. We talked about the gaps between what we´ve developed in our high performance competencies and where we are today. We assessed that in a lot of different ways. We looked at our employee performance review to look at where gaps were. We surveyed managers and employees. From all that information we focused our training at all levels. One of the great benefits of that is that we better spent our dollars and we got a better return because we were really focused on developing the things that needed to be developed. For our leaders we added a 360-survey process, which was reflective of the leadership competencies. From that they were able to develop individual action plans, which we measure once a year. I would say that we have significantly raised the bar in terms of leadership effectiveness within the organization.

AM: Can you speak to how you tie in recognition and reward?

SH: Recognition is really the business that we are in since we service the recognition and incentive market. We work with a lot of Fortune 500 companies who are implementing programs in those areas. From a recognition standpoint we have several programs that recognize performers within the organization. What we found was that we probably were not recognizing the right behaviors that were aligning with the business strategy. We also were not truly recognizing top or high performance within the organization. We had a disconnect there. We were recognizing a lot of individuals and a lot of behaviors but we weren´t really sure they were the right behaviors or the right individuals. We re-crafted our program to align with our business objectives and our high performance competencies. Again, they were being reinforced through our recognition programs in the way that we were acknowledging people´s skills, knowledge and behavior.

On the reward side of things it was a bit harder because that includes compensation, which is clearly a very sensitive topic in any organization. We implemented a pay-for-performance program. Three years ago we were very much an entitlement organization, so as we are driving high performance we had to say that we were going to start rewarding people for better work instead of distributing our merit pool equally. This year we implemented a program where people were rated through the employee performance process and based upon how they were rated, they were then given X amount of dollars. Our people that were performing at a higher level and exhibiting the skills, knowledge and behavior that we were requesting were getting more of that merit pool. Obviously, when you integrate this kind of program there are people that are not performing as well and get less money. Our thought was that those people are going to make two choices. Either they are going to choose to perform better or they are going to exit the organization. We just ended our fiscal year and I expect that we will see more fallout over the next couple of months. Overall, it was well received but you are always going to have a pocket of employees that do not think it is a positive. You have to feel OK about that.

AM: Do you have any recommendations around the change management process?

SH: You have to really assess what your culture is today. I came into an organization that was very much an entitlement culture. With that kind of culture you are not going to move to high performance tomorrow. You have to figure out what kind of phased approach you are going to take. For example, my CEO said to me in my first year that they wanted to pay differently. That´s fine, but we weren´t ready yet. We didn´t have a leadership team that was necessarily comfortable with that, knew how to deliver it or knew how to do effective performance management that leads to pay-for-performance. I would suggest that anybody in that situation take stock of the current situation and figure out where they want to be in three to five years. Then, you can figure out how to get there over time. I have seen organizations try to do it overnight and it is usually not done effectively. Part of change management is having a lot of conversation, both collectively with management and employees and also one-on-one. My team and I have spent a lot of time in conversations with people trying to get them comfortable with concepts. At the end of the day not everyone is going to be comfortable and you have to be open to the fact that it could potentially cause turnover in your organization. But you can get enough of the population comfortable to get them moving in the right direction. There needs to be consistent and ongoing communication regarding all these things and then the behavior needs to align with that. People need to see that you are doing what you said you were going to do. A lot of organizations like to say they are moving to high performance but their behavior doesn´t align with that, which is where you get a lack of credibility and trust.

AM: How did you go about measuring success?

SH: We had some good measurement in some areas and we are still developing baseline measures. The first thing we said was that financial measures were important to us. Are we growing sales? Are we growing our bottom line profits? That was one area that we looked at. We also looked at employee satisfaction. We do an employee satisfaction survey once every six months and it is very short. It is a snapshot in time and it looks at the 12 factors that we know from best practice research will retain employees. We look at leadership effectiveness through our 360-degree surveys. We know where we were two years ago and we know where we are now. We have moved the score significantly upward. I feel that we have really increased our leadership effectiveness across the organization.

One baseline measure that we are looking at developing this fiscal year is the development of top performers. Are we really retaining those people that we see as top performers and high potential employees? Additionally, in HR we have sub-measures that we use in the hiring and training process.

AM: With regards to the employee satisfaction index can you share a few of the indicators with us?

SH: We did a lot of research in this area. Typically, companies do very long drawn out employee surveys. When I came on board we were doing the surveys annually and we were in a situation where it was taking us so much time to compile the data, create action plans and implement that we were already on top of the next survey. We decided to do away with that and take a snapshot in time, particularly because we are always going through a lot of change as an organization. We look at satisfaction with direct supervisors, senior management, compensation and benefits, organizational communication, job content and recognition. We look to identify trends that we can action plan around. For example, one of the things we measure is satisfaction level around career management and development. It was always coming out as a low rated item, but it was rated very high in terms of importance. In the last year we implemented a more formalized process around career management and since then we have been able to significantly increase those scores.

Sometimes we receive negative feedback but we don´t necessarily do anything with that. For example, we just completed our first survey since implementing the pay-for-performance program. From the prior survey, the compensation scores went down. We all know compensation is never rated high because no one ever thinks they are paid enough, but we saw that take a dive. We attribute the dive to the people that were used to getting the normal pooled increase and received less than that. They were obviously unhappy but that doesn´t mean we are going make a change there. We try to put all feedback into the context of trying to drive a high performance culture and organization.

AM: If you were to give advice to someone starting this type of initiative what would you suggest?

SH: Top management has to be involved and engaged. Trying to do something like this as a grassroots effort or directing it through your middle management group will have limited effectiveness. You have to have a senior management team that believes in the power of its people in order to grow the business. They have to be a champion of the initiative across the board. I also can´t emphasize enough the importance of communication. It has to be aligned throughout your management team. You can´t have mixed messages going out and the messaging has to be continuous. People are not going to understand what you mean if you only communicate once. The last thing I would recommend is to follow your messaging with behaviors and programs that align with the message. People won´t believe something until they see it.

From an HR perspective you have to be prepared for cultural change and be prepared to make some unpopular decisions. You may have to do a lot of lobbying and have a lot of conversations around change. You also have to be prepared for greater than normal turnover, depending on how much change you are looking to initiate.

What made the process work for us is that we were fair and respectful. We didn´t use it as a way to terminate people and get them out of the organization. We set the bar and we do everything we can to help people reach that bar though training, developing, mentorship or a change in jobs to help people better leverage their strengths. If none of that works then we might look at an exit strategy but we can always say that we did the best we could. That approach has helped people embrace the high performance discussion, communication and initiatives.