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Linking 360° Feedback to Business Outcome Measures

This study explores the correlation between 360° feedback results and business outcomes in a leading technology and entertainment retailer. The findings highlight the importance of competency-based development and its impact on revenue, gross margin, and sales of accessory and service plans.

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Linking 360° Feedback to Business Outcome Measures

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  1. Linking 360° Feedback to Business Outcome Measures Anna Erickson Tony Allen

  2. Nation’s #1 Specialty Retailer of Technology and Entertainment Products and Services

  3. Best Buy Performance ($ in billions) $30 $25 19.6 $20 15.3 $15 12.5 10.1 $10 8.3 7.8 7.2 5.1 $5 $0 FY '95 '96 '97 '98 '99 '00 '01 '02 Revenue

  4. Best Buy Retail • Structure • 584 Stores • 56 Districts • 3 Regions • Leaders “Score Carded” on Key Financial and Operational Measures Including: • Revenue & Gross Margin • Sales of Key Products • Customer Loyalty • Employee Engagement/Satisfaction

  5. Our Research • 360° Feedback Results (June 2002) • 38 District Managers (DMs) • 573 Store/General Managers (GMs) • 4 Key Financial Measures (July 2002) • Revenue • Gross Margin • Accessory Sales • Sales of Product Service Plans

  6. Best Buy 360 Highlights • Administered Annually • Retail and Corporate Leadership • Corporate Director level and above • Retail Store Manager (GM) and above • Purely Developmental • Competency Based • Raters = Self, Superior, Subordinates and Peers

  7. Best Buy Corporate Competencies

  8. District ManagerCorrelations Gross Accessory Service Revenue Margin Sales Plan Sales Drive for Results -.100 -.066 .486** .547** Managing Vision & Purpose -.213 -.155 .455** .484** Organizational Agility -.234 -.180 .445** .464** Strategic Agility -.118 -.074 .365* .396* Customer Focus -.252 -.235 .431** .415** Integrity, Trust, & Ethics -.145 -.133 .349* .274 Self-Knowledge -.288 -.240 .518** .423** Building Effective Teams -.099 -.057 .508** .591** Developing Direct Reports -.145 -.063 .396* .406* Listening -.308 -.271 .431** .251 Managing Diversity -.391* -.370* .615** .487** Motivating Others -.276 -.182 .470** .389* ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). (n = 38)

  9. District Manager Results • Correlations with Gross Margin and Revenue NOT statistically significant for most competencies • Managing Diversity negatively correlated with Margin & Revenue • Gross Margin r = -.39 (p<.05) • Revenue r = -.37 (p<.05)

  10. District Manager Results • Service Plan and Accessory Sales strongly related to 360 Results for DMs • Strongest Relationships with Accessory Sales were • Managing Diversity r=.61 • Self Knowledge r=.52 • Bldg Effective Teams r=.51 • Strongest Relationships with Service plan Sales were • Drive for Results r=.55 • Bldg Effective Teams r=.59 • Managing Diversity r=.49

  11. Relation of scores to outcomes

  12. Store ManagerCorrelations (n = 573) Gross Acsry Srvc Plan Revenue Margin Sales Sales Drive for Results .192** .218** .258** .356** Managing Vision & Purpose .116** .133** .220** .167** Organizational Agility .079 .086* .251** .225** Strategic Agility .151** .170** .251** .336** Customer Focus .176** .194** .237** .319** Integrity, Trust & Ethics .177** .193** .245** .325** Self Knowledge .188** .201** .290** .355** Building Effective Teams .174** .191** .264** .330** Developing Direct Reports .154** .171** .278** .340** Listening .196** .214** .280** .385** Managing Diversity .177** .184** .288** .343** Motivating Others .109** .102* .170** .137** ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed).

  13. Store Manager Results • All correlations positive and most statistically significant • Again, accessory and service plan correlations stronger than those with Revenue & Gross Margin • Overall, correlation coefficients much smaller than for DMs

  14. Why are correlations for Dist. Mgrs larger than for Store Managers? • Frequent movement of Store Mgrs • Sophistication of Raters • Quality of items included in the survey

  15. District Mgr. Items Focuses attention and energy on factors critical to success Sets high standards and expectations for him/herself Consistently meets aggressive timelines as established by self or others Mobilizes others as a way to accomplish difficult tasks Consistently follows through on his/her commitments Store Mgr. Items Creates and executes plans to improve store performance Has a sense of urgency, passion, and energy Accepts nothing less than our best effort every day; strives for excellence Sample Items: Drive for Results

  16. Summary/Learnings • 360 does relate to important Company outcomes – especially those more directly impacted by manager behavior • Rigor in item development pays off later • Don’t assume the process is purely developmental – identify outcomes most likely to be impacted and build a measurement plan early • Shape best practices to work with culture

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