John McDevitt, senior vice president, human resources and labor relations, UPS 
John McDevitt, senior vice president, human resources and labor relations, UPS

Whether enabling an online shopper to reschedule a delivery via Facebook or ensuring the safe shipment of temperature-sensitive vaccines to a remote corner of the globe, the seamless simplicity with which UPS serves its customers belies the complexity of its operations. As it successfully transformed itself from a U.S. package delivery company to a global leader in supply chain management and logistics, UPS has depended on its ability to manage the performance of its most important asset: its workforce.

"Our employees strive to perform at the highest possible level, and performance management is about how we reward employees for doing just that," said John McDevitt, senior vice president of human resources and labor relations at UPS. "Performance management is the engine of our organization," said Mike Johnson, vice president and chief human resource officer.

But to maintain its leadership position in today's dynamic environment, UPS leaders recognized that they needed to focus more sharply on engaging and retaining top-performing employees. So in 2011, UPS started on a journey to more clearly differentiate the contributions of each employee and to better align pay and performance via a new base pay system. But early employee feedback revealed that some employees were struggling to understand the change and, in particular, the connection between performance and rewards.

Towers Watson consultant Emma Flack (far right) with UPS executives (left to right) Leslie Follman, succession management supervisor; Justin Brennan, learning project supervisor; Laura Collings, training communications manager; and Amy Mancilla, global learning network manager 
Towers Watson consultant Emma Flack (far right) with UPS executives (left to right) Leslie Follman, succession management supervisor; Justin Brennan, learning project supervisor; Laura Collings, training communications manager; and Amy Mancilla, global learning network manager

The Disconnect

In the past, UPS had relied on an egalitarian approach to people management and rewards, emphasizing loyalty, commitment and effort over individual performance and current-year results. The leadership now intended to move to a performance management strategy that placed a high value on differentiating and rewarding individual performance in a given performance period. "UPS needed to create a 'rewards for performance' environment, and this required a shift in its performance culture," said Towers Watson senior consultant Danielle Rasey.

A number of issues contributed to the challenge. "There were basic misunderstandings about the process," said Laura Collings, training communications and marketing manager. Anne Schwartz, vice president of global leadership and talent development, added, "The phases of the performance management process weren't viewed holistically as part of a year-long cycle."

UPS turned to Towers Watson to help address this challenge. "Towers Watson already understood the journey we were on and where we wanted to go, so we brought them in right away," Schwartz said. An interdisciplinary team was formed to design a communication and change management initiative. The key project requirements included:

  • An easy-to-access, single source of information about the performance management process
  • A training curriculum and accompanying tools
  • Clear, consistent, ongoing communications delivered via multiple channels

Cultivating a Performance-Oriented Culture

The team conducted a stakeholder analysis to identify the actions required of each workforce group, as well as their information needs. The initiative included:

  • Performance management web portal. The central repository of performance management materials, the portal puts accurate, up-to-date information at the fingertips of the entire workforce.
  • Performance management training program. The team developed an online training program that all employees were required to complete in preparation for year-end performance reviews and goal setting for the coming year.
  • Customized communications. Borrowing from consumer marketing, the team developed communications and activities tailored to the various audiences, from HR leaders, to managers, to field employees.
  • New visual identity. An eye-catching graphic identifier helped employees understand the performance management cycle and easily spot performance management materials.

The communication campaign stressed that performance management is a shared responsibility between managers and employees. It also highlighted the importance of ongoing feedback, as well as formal midyear and year-end evaluations, in helping employees understand how well they're meeting expectations.

Delivering the Change

Mike Johnson, vice president and chief human resource officer, UPS, with Anne Schwartz, vice president, global leadership and talent development, UPS (left), and senior Towers Watson consultant Danielle Rasey 
Mike Johnson, vice president and chief human resource officer, UPS, with Anne Schwartz, vice president, global leadership and talent development, UPS (left), and senior Towers Watson consultant Danielle Rasey

How did UPS gauge the success of the effort?

  • In its first two months, the performance management web portal generated over 130,000 visits, reflecting the effectiveness of the new site.
  • Over 26,000 management employees completed the performance management training by the deadline — a notable accomplishment considering that this training took place during the holiday season, UPS's busiest period.
  • 98% of eligible employees received a performance evaluation within the required time frame, according to training program guidelines.

"There's now much greater clarity around how individual performance is measured and how everyone's performance collectively helps UPS achieve its objectives," said Johnson. Owing to this improved understanding of performance management, UPS is better positioned to engage and retain top performers."

"Towers Watson provided a valuable external perspective," McDevitt said. "We were coming to a fork in the road, and Towers Watson consultants gave us good direction at a time when we wanted to get from point A to point B as quickly as possible with minimal detours."

The Ongoing Journey

The successful communication and change management initiative enabled UPS to build the foundation for its ongoing performance management journey. "I don't see a conclusion to this project; at UPS, we're always constructively dissatisfied," McDevitt said.

UPS leaders believe that when performance management is done right, everyone wins. Individual and team performance improves; customers are satisfied, and the company sharpens its competitive edge.

The Big Lesson Learned: It Takes an Interdisciplinary Team

UPS leaders assembled a strong interdisciplinary team to spearhead the performance management project. The team included a project manager from UPS and representatives from the company's learning and development, corporate communications, compensation and organizational development functions. Towers Watson communication and change management consultant Emma Flack was embedded in the team three days a week for roughly six months. Towers Watson senior consultant Danielle Rasey served as the strategic advisor, guiding overall efforts and deliverables.

Such a team enables:

  • Ongoing collaboration. This type of team facilitates ongoing collaboration among various groups, leading to the quicker resolution of key issues.
  • Ready access to subject matter experts. With subject matter specialists on the team, expert knowledge was available when and where it was needed.
  • Sustained change. Because the team was staffed largely by UPS employees, its members continued to own the change after completing the formal project, which is essential to sustaining the strengthened link between performance and rewards.