Performance Assessment in Finland MINISTRY OF FINANCE, FINLAND Performance Assessment in Finland Asko Lindqvist Counsellor Office for the Government as Employer Personnel Department/AL 5. - 6.2.2007

1. What is performance management? find the appropriate balance between the resources available and the results to be be achieved with them balance resources and targets on the one hand and efficiency and quality on the other the political decision maker sets the targets for the organization. The top management of the organization translates these targets into operational activities and delegates them down through the whole organization to the whole staff (organizational performance – individual performance) Personnel Department/AL 5. - 6.2.2007

2. Enhancing performance management Reform of budget legislation performance management to become more strategic separating broad outcome targets (ministries) and operational performance targets (other entities) and connect these to the allocation of resources. strategic outcome targets often quite vague while operational performance targets more precisely formulated and measurable improved reporting and genuine accountability to bring all the administrative sectors on the same level of development: in some sectors, PM is an advanced control tool while in others commitment has been low Personnel Department/AL 5. - 6.2.2007

3. Basic performance criteria (1) MINISTRY OF FINANCE, FINLAND 3. Basic performance criteria (1) Outcome targets Policy effectiveness: outcomes Policy effectiveness How operations and finances have affected policy effectiveness ACCOUNTABILITY PERFORMANCE MANAGEMENT Operational performance targets Operational results: outputs (which can be influenced through management) Operational efficiency economy productivity profitability cost-equivalence Outputs and quality management -goods and services service capacity and quality Human resource management Personnel Department/AL 5. - 6.2.2007

4. Basic performance criteria (2) MINISTRY OF FINANCE, FINLAND 4. Basic performance criteria (2) Policy effectiveness OUTCOMES ACCOUNTABILITY PERFORMANCE MANAGEMENT OUTPUTS Goods an services, service capacity of the agency Operational PROCESSES and their quality RESOURCES Appropriations, staff, intangible assets Personnel Department/AL 5. - 6.2.2007

5. Individual performance Performance and development targets discussions are conducted once a year at every level between the managers and foremen and their immediate subordinates. The individual performance assessment is conducted as part of these discussions. Every organisation has a set of criteria for assessing performance. Typically, the main criteria are “competence, effectiveness and co-operation”, with a set of sub-criteria for each main criterion. Personnel Department/AL 5. - 6.2.2007

6. Individual performance (2) The pay by individual performance is systematically linked with the performance rating given as the result of the performance assessment. The rating is based on an analytical system of appraising the elements of the performances and combining the result into a rating. The maximum pay has been agreed between 25 and 50 % of the basic salary, generally closer to 50 than 25 %. The average amount of individual performance pay in relation to individual total pay is about 15 % according to latest statistics. Personnel Department/AL 5. - 6.2.2007

7. Individual performance assessment and PRP Measuring individual performance is one of the most crucial points of the PRP in terms of transparency and trustworthiness. The transparency of the rating process consists of the publicity of the criteria and the detailed discussion on the performance that is included in the performance and development targets discussions. This has meant a new and sometimes difficult role for the managers who give their estimates on individual performances. Personnel Department/AL 5. - 6.2.2007

8. Individual performance assessment and PRP (2) managers may not know adequately the contents of the work of their staff in order to assess their performance managers may not be able to justify their assessments adequately assessments have not been made regularly individual targets have not been adequately explicit and clear in expert work it would sometimes be better to assess teams rather than individuals in conclusion: PRP calls for a reform of the entire management culture Personnel Department/AL 5. - 6.2.2007