"This is how young managers learn leadership - quickly and effectively."
KPMG Executive Board member Frank Grube explains in this interview why it makes sense to replace ratings with qualified feedback in order to promote employee development — and how to retain them in an aggressive market environment and reduce staff turnover.
undconsorten has been supporting KPMG Germany for over two years in developing and introducing an innovative and comprehensive people concept under the motto "Führung stärken. Stärken fördern" ("Strengthening leadership. Promoting strengths"). The result is a new management structure in which young managers assume more disciplinary responsibility.
What motivated you to rethink leadership and development at KPMG?
Frank Grube: Our main goal was to offer all employees attractive opportunities to develop themselves. This led to the question of how we could provide effective and targeted support for their development. Should the focus be more on development potential? Or do you focus on the specific strengths that each individual has? This approach seemed more convincing to us.
What are the key points of the new people concept?
Frank Grube: We are shifting the disciplinary management responsibility for employees, which previously lay exclusively with senior managers, to managers and senior managers and want to get them involved as early as possible and enable them to develop employees. In this way, we put leadership on a broader basis. The new roles assumed by HR coaches and HR partners are particularly important. The coaches primarily support our younger managers. The HR partners are senior contacts for management and development issues who play a central, steering role in the development process of all employees – for example when they facilitate development conferences.
Auditors calculate with a sharp pencil. How does the new concept pay off for KPMG?
Frank Grube: Of course, numbers play a major role for the Big Four. That's why we first calculated the business case and asked ourselves how much our previous concept costs. Based on this, we determined how high the average expense for the intended management cascade is likely to be. Although we are now slightly above that, we expect a significant improvement in leadership quality and other positive effects in return: employee loyalty and a decline in staff turnover despite an aggressive market environment.
Partner-driven organizations are often very conservative. How did you convince your 700 partners and directors?
Frank Grube: In order to anchor the concept in the company, we quickly moved from the Executive Board to the management teams, explaining the content and listening to whether we had overlooked anything important. Partners and directors were informed in large dialogue formats with the participation of the Board of Management. In discussion rounds and workshops, we answered questions and facilitated critical discussions.
"After all, the new people concept brings with it a major change in our management culture."
One of the cornerstones of the concept is to refrain from evaluating the individual performance of employees in the form of ratings. Has this been well received by the employees?
Frank Grube: First of all, it is important to know that in the past the rating had a direct influence on our variable remuneration. Performance was evaluated on a scale of 1 to 5. In the employee appraisals we usually discussed this number for a long time, and the actual feedback as well as exchange aboutindividual development were not given enough attention. Now every employee receives qualified project feedback from their operational managers on the project - regarding the technical skills learned as well as their specific strengths and areas of development, with a clear focus on the strengths. In order to reflect on the employee's performance and possible next career steps, the supervisor must then answer six simple closed questions, for example on the employee's individual contributions to performance or compared to the respective peer group.
Isn't there a danger that shadow ratings will result?
Frank Grube: In an organization with a strong focus on figures, there is certainly the danger that alternative valuation models can develop. So far, however, we have been able to avoid this at KPMG. And we will continue to take a very close look at this in the future.
The new concept shifts the focus to employee development. What changes have there been for the individual?
Frank Grube: For the young employees below the group of managers, the people concept has now been running for a good one and a half years. During this period, there were two remuneration rounds in which the managers discussed and individually determined salary increases and bonuses for their employees. In addition, specific development steps and measures for the next twelve months were defined in writing during development conferences. Now, it is crucial that we manage to implement the elements of the development plan in everyday life as well.
The group of managers and senior managers experiences the change from two perspectives: on the one hand, as technical and, in part, disciplinary supervisors, they are concerned with people management and must, of course, provide feedback on projects as the responsible managers. On the other hand, they are themselves led by directors and partners. The management culture is shaped both by the way they deal with their employees and by the expectations managers have of their disciplinary supervisors and partners.
The main change for the partners and directors is that they have transferred part of their disciplinary management responsibility, namely that for junior employees, to middle management. But they still have an important role, both as partners and as disciplinary supervisors for the managers, e.g. they decide on development and remuneration for this target group.
If you look back on the developments of the past two and a half years – what is the greatest success of the new people concept?
Frank Grube: A clear success is how the managers have been fulfilling their role as disciplinary supervisors, how they have been going into employee appraisals and remuneration rounds with a great sense of responsibility and how the organization has been giving us very positive feedback on this.
"The fact that we were able to improve a lot here has been confirmed by all stakeholders: the employees themselves, the HR partners as well as our works council."
KPMG itself is a professional services firm. In your opinion, what added value does an external consultant provide in a project like the people concept?
Frank Grube: I like to compare this with soccer: just as there are over 80 million national coaches in Germany, there are at least as many HR experts as partners and directors in every professional services firm, but that also means that you need an experienced consultant who takes on an external perspective – someone who is available as a coach and, given the experience, is able to hold up a mirror to those responsible in the company.
HR is often accused of being out of touch with the realities of business. How does the people concept serve business specifically?
Frank Grube: Because we get to know the competencies and strengths of our employees so well at an early stage, we can promote their development in a more targeted way and at the same time train them much more broadly – for example, by deploying employees in various business areas as part of rotation programs. This qualified versatility is increasingly in demand. For the past three to four years, we have observed that our clients particularly appreciate consultants in the course of digitization who, as business people, managers and also as discussion partners, look beyond their own horizons and are familiar with various topics and approaches to solutions.
In the meantime, you have assumed responsibility for Services Tax and Law instead of HR on the Executive Board from the beginning of October. How do you, together with the management team, implement the people concept in this area?
Frank Grube: The people concept must be the benchmark in both services as best practice. We hope that this will lead to a further reduction in staff turnover. And here, too, we are looking to achieve a targeted and comprehensive development of our employees.