Performance Management: Focus on Performance Appraisals

Course Objectives Understand performance rating scale After completing this workshop, the learner will be able to: Understand performance rating scale Fill out a Performance Appraisal Form Conduct meaningful performance appraisal discussions Be prepared for some common challenges of the appraisal process Set effective goals with employees

Your Experience Think about your last review: What thoughts come to mind? What went right, what went wrong?

Performance Management An iterative process of goal-setting, communication, observation and evaluation to support, retain and develop exceptional employees for organizational success.

Why Manage Performance? To reach organizational mission and goals Encourage and reward behaviors aligned with organizational mission and goals Curb or redirect non-productive activities

02 QUESTIONS You can ask both yourself and each employee two questions: How does your position contribute to the overall goals of the business? How will you know when you are successful? These two questions are deceptively simple, but taking the time to really dig for the answers will start to create a stronger alignment between each person and the overall success of the business.

What do Employees Expect? Clear expectations Positive/constructive feedback on a regular basis Involvement in goal setting Be treated fairly and consistently Sharing of information and resources Job/career enrichment opportunities

Planning for the Process Review employee’s job description Understand the performance measurement system Review notes from the year Understand employee expectations

Types of Appraisal Forms Exempt Exempt Managerial Non-Exempt Senior Administrator

Rating Scale 4 - Excellent (Exceeds Standards) 3 - Good (Fully Meets Standards) 2 – Acceptable (Usually Meets Standards) 1 – Unsatisfactory (Fails to Meet Standards)

Excellent (Exceeds Standards) Clearly considered to be exceptional performers. Consistently exceed the communicated expectations of the job function, responsibility or goal. Demonstrate unique understanding of work beyond assigned area of responsibility. Identify needs and provide unique, innovative and workable solutions to problems.  Achievements and abilities are obvious to subordinates, peers, managers and customers.

Good (Fully Meets Standards) These employees are “on track” and fully achieve expectations. Independently and competently perform all aspects of the job function, responsibility, or goal. Performance consistently meets the requirements, standards, or objectives of the job. Occasionally exceeds requirements. Recognizes, participates in, and adjusts to changing situations and work assignments.

Acceptable (Usually Meets Standards) Generally meet expectations required for the position. Competently perform most aspects of the job function, responsibility or goal. May require improvement in one or two areas of consistent weakness. Employee requires coaching in a weak area or may need additional resources or training to meet expectations.

Unsatisfactory (Fails to Meet Standards) Employees with this rating fail to satisfactorily perform most aspects of the position (or function). Performance levels are below established requirements for the job. Employee requires close guidance and direction in order to perform routine job duties. Performance may impede the work of others and the unit. A performance improvement plan must be submitted to OHR.

Scheduling the Meeting Notice Location Self-evaluation Appropriate form Comments Supervisory approval

Filling out the Form Review notes Behaviors vs. value judgments Align categories on form with employee’s job responsibilities Optional categories Set goals

Setting Effective Goals Quick Tips S.M.A.R.T. Goals Specific Measurable Achievable/Agreed Upon Relevant Time-bound Aligned Adjustable

Common Mistakes Classification Central Tendency Leniency Horns/Halo Effect Reliability Similarity

Performance Appraisal Practice Review Performance Appraisal for items that are: Under-rated Over-rated Poorly stated Refer to employee background Rewrite Performance Appraisal using tools reviewed today Make sure to fill out the form completely including the Goals section

Common Performance Appraisal Challenges

Conducting the Meeting Review rating system Discuss employee’s self review Let employee talk Be aware of all three parts of the messages you send: Words Tone Body Language Stay focused on performance

The basis of performance management

PERFORMANCE MANAGEMENT A systematic process for improving organizational performance by developing the performance of individuals and teams. PERFORMANCE MANAGEMENT

PURPOSE OF PERFORMANCE MANAGEMENT Obtain better results from the organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standards and competency requirements Establish shared understanding on what is to be achieved, and manage and develop people in a way which ensures that it will be achieved Align individual objectives to organizational objectives and ensure that individuals uphold corporate core values Act as a lever for change

PERFORMANCE MANAGEMENT – SEVEN QUESTIONS What do we mean by performance? How can we identify good or poor performance? How can we establish the cause of good or poor performance? How can we motivate people to perform well? How do we deal with under-performers? How can we do all this fairly and consistently? How do we achieve line manager buy-in?

THE BUSINESS CASE FOR PERFORMANCE MANAGEMENT Provide framework for effective people management Develop high-performance culture Achieve human capital advantage Develop required skills, abilities and attitudes Promote job engagement Uphold core values

The performance management system

PERFORMANCE MANAGEMENT CYCLE Performance and development planning – performance agreement role definition objectives competencies performance improvement personal development Review performance dialogue and feedback agree strengths and any areas for improvement build on strengths – ‘you are particularly strong in this area’ – how can you make even greater use of them? Act carry out role implement performance improvement plan implement personal development plan Manage performance throughout the year monitor performance provide continuous feedback provide coaching deal with under-performers

CHARACTERISTICS OF PERFORMANCE MANAGEMENT Planning Feedback Measurement Performance management Dialogue

Performance management processes

PERFORMANCE AGREEMENT The purpose of the performance agreement is to: agree objectives and competency level requirements agree on methods of measuring performance agree on plans for performance improvement and personal development

TYPES OF OBJECTIVES Ongoing (role or work) objectives Targets Projects Behaviour Values Improvement Learning

CHARACTERISTICS OF GOOD OBJECTIVES S = specific/testing – clear, unambiguous, understandable and challenging M = measurable – in terms of quantity, quality, time or money A = achievable – challenging but within the reach of a competent and committed person R = relevant – to organizational objectives so that they and the individual’s goals are aligned T = time-framed – to be completed within an agreed timescale

PERFORMANCE REVIEWS: KEY FEATURES Forward looking – not a post mortem Exchange of views (dialogue) Measurement Feedback Positive reinforcement Constructive Leads to an agreement Assessment

WHAT TO FIND OUT AT A REVIEW MEETING What individuals have learned or need to learn Where they have got to Where they are going How they are going to get there What they believe they know and can do What help or guidance they require

Assessing performance

ASSESSMENT METHODS Narrative: eg ‘This employee has worked effectively and delivered the expected results’ Visual (Matrix) Rating 360-degree feedback Balanced scorecard

VISUAL (MATRIX) ASSESSMENTS High level of achievement, approach needs to improve High performing Not meeting requirements Positive approach, low level of achievement Achievement measures Behaviours, attitudes, overall approach to work

RATING – FIVE-POINT POSITIVE/NEGATIVE SCALE  A Outstanding performance in all respects.  B Superior performance, significantly above normal job requirements.  C Good all-round performance which meets the normal requirements of the job.  D Performance not fully up to requirements. Clear weaknesses requiring improvement have been identified.  E Unacceptable. Constant guidance is required and performance of many aspects of the job is well below a reasonable standard.

EXAMPLE OF POSITIVE FOUR-POINT RATING SCALE Very effective: Meets all the objectives of the job. Exceeds required standards and consistently performs in a thoroughly proficient manner beyond normal expectations. Effective: Achieves required objectives and standards of performance and meets the normal expectations of the role. Developing: A contribution which is stronger in some aspects of the job than others, where most objectives are met but where performance improvements should still take place. Basic: A contribution which indicates that there is considerable room for improvement in several definable areas.

ARGUMENTS FOR AND AGAINST RATING Useful to sum up judgements about people Recognizes that we all form overall views about people Tells people clearly how they are doing, and can be used as a basis for agreeing what needs to be done to improve the rating Can inform performance or contribute to pay decisions Largely subjective Difficult to get consistency Over-simplifies complex judgements Overshadows performance reviews

360-DEGREE FEEDBACK MODEL Manager Colleagues Individual Customers/clients Direct reports

360-DEGREE FEEDBACK METHODOLOGY 360-degree processes rely on questionnaires which ask for an evaluation such as ‘how well does… do…?’ Typical headings are: Leadership  Team player People management  Self-management Communication  Vision Organizational skills  Decision making Expertise  Drive Adaptability Feedback may be provided by a profile as illustrated in the next slide. It is usually anonymous and may be presented by an external consultant who is available to give advice and counselling.

EXAMPLE OF 360-DEGREE PROFILE Gives useful feedback Establishes good working relationships Open to new ideas Values other’s opinions Recognizes achievements Scale 1 2 3 4 5 EXAMPLE OF 360-DEGREE PROFILE

THE BALANCED SCORECARD Customer perspective How do customers see us? Financial perspective How do we appear to our shareholders? Innovation and learning (people) perspective Can we continue to improve and add value? Internal perspective What must we excel at?

Reporting on performance management

PERFORMANCE MANAGEMENT FORM, PART 1 PERFORMANCE AND DEVELOPMENT: AGREEMENT AND REVIEW Name: Forename: Job title: Department: Reviewer’s name: PERFORMANCE AND DEVELOPMENT AGREEMENT Objectives Performance measures Competencies Agreed actions PERSONAL DEVELOPMENT PLAN Learning need How it will be met Action by whom Completion date

PERFORMANCE MANAGEMENT FORM, PART 2 PERFORMANCE AND DEVELOPMENT REVIEW Objectives Achievements Competencies Actions taken Development needs Comments by reviewer: Comments by reviewee:

Performance management skills

DEVELOPING PERFORMANCE MANAGEMENT SKILLS Communication Briefing Self-development Training Coaching Mentoring

DEVELOPING PERFORMANCE MANAGEMENT SKILLS AT STANDARD CHARTERED BANK Improve the way managers manage Management development curriculum E-learning module for key pillars of performance objective setting interim and first review informal discussions performance coaching managing poor performance Performance coaching guides Studying our best managers and migrating their practices

CONDUCTING A REVIEW MEETING Encourage the individual to do most of the talking Listen actively Allow scope for reflection and analysis Analyse performance not personality Keep the whole period under review No surprises Recognize achievement and reinforce strengths End meeting positively with agreed action plan

GIVING FEEDBACK Build feedback into the job Provide feedback on actual events Describe, do not judge Refer to specific instances Ask questions rather than making statements Get people to work things out for themselves Select key issues – focus on improvable areas Show understanding

COACHING AS A PROCESS OF MANAGEMENT Coaching as part of the normal process of management consists of: Making people aware of how well they are performing by, for example, asking them questions to establish the extent to which they have thought through what they are doing. Controlled delegation – ensuring that individuals not only know what is expected of them but also understand what they need to know and be able to do to complete the task satisfactorily. This gives managers an opportunity to provide guidance at the outset; guidance at a later stage may be seen as interference. Using whatever situations may arise as opportunities to promote learning. Encouraging people to look at higher-level problems and how they would tackle them.

THE ‘GROW’ MODEL OF COACHING ‘G’ is for the goal of coaching, which needs to be expressed in specific, measurable terms that represent a meaningful step towards future development. ‘R’ is for the reality check – the process of gaining as full a description of what the person being coached needs to learn as possible. ‘O’ is for option generation – the identification of as many solutions and actions as possible. ‘W’ is for wrapping up – when the coach ensures that the individual being coached is committed to action.

Managing performance

IMPROVING INDIVIDUAL PERFORMANCE: SEVEN STEPS 1. Select the goal – establish priority areas for action. 2. Define expectations – targets and standards. 3. Define performance measures – the basis upon which progress to achieving the goal can be monitored. 4. Plan – the improvement programme. 5. Act – implement the improvement programme. 6. Monitor – review progress and analyse feedback to ensure the target or standard is achieved. 7. Extend the process – continue the development programme as required.

DEALING WITH UNDER-PERFORMERS 1. Identify and agree the problem. 2. Establish the reason(s) for the shortfall, eg where the individual: – did not receive adequate support or guidance from his/her manager; – did not fully understand what he/she was expected to do; – could not do it – ability; – did not know how to do it – skill; – would not do it – attitude. 3. Decide and agree on the action required. 4. Resource the action. 5. Monitor and provide feedback.

PERFORMANCE DRIVERS – PERCENTAGE IMPACT ON PERFORMANCE Negative performance driver Positive performance drivers Fair and accurate feedback 39% Employee understanding of performance standards 36% Focus on weaknesses in review -26% Focus on strengths in review 36% Culture of internal communication 34% –40% 0% +40% Source: Corporate Leadership Council Performance Management Survey 2002 (sample size 19,000)

Performance management issues

THE FOUR MOST FREQUENTLY MENTIONED ISSUES E-reward survey of performance management 2005 100% Line managers do not have required skills 88% Line managers do not discriminate sufficiently in making assessments 84% Line managers not committed to performance management 75% Line managers reluctant to conduct reviews 74% 0%

ADDRESSING THE ISSUES ‘Providing full line management briefing, training, guidelines and policies.’ ‘Structured programme of training for managers plus ongoing coaching.’ ‘Senior management insistence.’ ‘Shift in culture among long-term employees that performance management is just something they have to go through but they will be in the job anyway, to a more businesslike approach to performance management, with accountability and competency.’ ‘Generating leadership from the top to support/encourage line managers to tackle poor performance head on in a fair and positive manner.’ ‘Nagging, nagging, nagging, motivating, threatening, etc.’

Developing performance management

BASIC DESIGN PRINCIPLES – CIVIL SERVICE PERFORMANCE MANAGEMENT REPORT Stretching objectives agreed at the beginning of the year. Individuals know the competencies and behaviours they are expected to demonstrate. Regular discussions during year between individuals and their managers to discuss progress. Formal meeting at the end of the year to record whether objectives have been achieved and levels of competence demonstrated. Line managers make a narrative assessment but do not translate this into a box mark.

INTRODUCING PERFORMANCE MANAGEMENT Advice from the respondents to the e-reward 2005 survey Dos Don’ts Consult and involve Provide training (formal and coaching) Communicate Get support from senior management Get buy-in from line managers Align to organizational and stakeholder needs Keep it simple Ensure clear purpose and processes Monitor and evaluate Don’t make it too complicated Don’t make it a form-filling exercise Don’t underestimate the time it takes to introduce Don’t keep changing the system Don’t assume that managers have the skills required Don’t link to pay Don’t blindly follow others Don’t neglect communication, consultation and training Don’t assume everyone wants it

INTRODUCING PERFORMANCE MANAGEMENT 6. Pilot test and re-train 5. Train 4. Develop process 3. Communicate and involve 2. Enlist support 1. Define purpose

EVALUATING PERFORMANCE MANAGEMENT – OPINION SURVEY Please indicate how you felt about performance management by recording your reactions to the following statements. Indicate: A If you fully agree B If you partly agree C If you disagree 1. I am quite satisfied that the objectives I agreed were fair. 2. I felt that the meeting to agree objectives and standards of performance helped me to focus on what I should be aiming to achieve. 3. I received good feedback from my manager on how I was doing. 4. My manager was always prepared to provide guidance when I ran into problems at work. 5. The performance review meeting was conducted by my manager in a friendly and helpful way. 6. My manager fully recognized my achievements during the year. 7. If any criticisms were made during the review meeting, they were acceptable because they were based on fact, not opinion. 8. I was given plenty of opportunity by my manager to discuss the reasons for any of my work problems. 9. I felt generally that the comments made by my manager at the meeting were fair. 10. The meeting ended with a clear plan of action for the future with which I agreed. 11. I felt motivated after the meeting. 12. I felt that the time spent in the meeting was well worth while.

ANALYSING THE PERFORMANCE MANAGEMENT GAP What are the current and desired performance management characteristics in your organization? 1 2 3 4 5 6 7 Performance management fully supported by top management Top management pays lip service to performance management Line managers fully committed to performance management Line managers see performance management as a pointless chore Line managers are fully skilled in performance management There are serious deficiencies in the skill levels displayed by line managers Line managers conscientiously follow performance management guidelines Line managers go their own way, if they do anything Employees do not trust their managers to review their performance fairly Employees believe that performance management is fair There is hard evidence that performance management is improving business performance There is no evidence that performance management is improving business performance Performance management deals effectively with under-performers Little or no action is generally taken to deal with under-performers

ANALYSING THE PERFORMANCE MANAGEMENT GAP What are the current and desired performance management characteristics in your organization? 7 6 5 4 3 2 1 Performance management fully supported by top management O X Top management pays lip service to performance management Line managers fully committed to performance management O X Line managers see performance management as a pointless chore O X Line managers are fully skilled in performance management There are serious deficiencies in the skill levels displayed by line managers O X Line managers conscientiously follow performance management guidelines Line managers go their own way, if they do anything O X Employees do not trust their managers to review their performance fairly Employees believe that performance management is fair O X There is hard evidence that performance management is improving business performance There is no evidence that performance management is improving business performance O X Performance management deals effectively with under-performers Little or no action is generally taken to deal with under-performers Mark on the scale: X for current, O for desired

Performance management case studies

PERFORMANCE MANAGEMENT AT ASTRA ZENECA (1) Definition of Performance Management: A continuous cycle of discussions between the employee and the manager to plan and review work and development.

PERFORMANCE MANAGEMENT AT ASTRA ZENECA (2) Stage 1 Business roles Plan Stage 2 Performance planning Evaluate Stage 4 Stage 3 Performance Performance measurement development Do

PERFORMANCE MANAGEMENT AT ASTRA ZENECA (3) Stages Business role clarification – clear statement of agreed role and objectives. Performance planning – agreement of targets to achieve the ‘plan–do–evaluate’ elements of managing performance. Performance development – agree skills required and prepare individual development plan. Performance measurement – provide ongoing feedback and an annual summary of an employee’s performance (no overall ratings).

APPROACH TO PERFORMANCE MANAGEMENT AT CENTRICA Built on existing best practice Standardization across the organization Calibration of performance against objectives across comparable populations Processes focused on individual performance Balanced scorecard Focus on behaviours helping managers achieve their targets Development of technical skills

PERFORMANCE MANAGEMENT PROCESS AT CENTRICA What How Centrica strategy and management agendas Business and individual performance contract Financial Customer Operational People Creates a compelling future Inspires others to achieve Demonstrates a passion for customers Delivers great business performance Learns and shares knowledge Performance rating Potential rating Development plan

PERFORMANCE MANAGEMENT AT PFIZER INC Ongoing coaching and feedback Performance planning Ongoing coaching and feedback Total compensation Development Performance review Guidance: ‘Have a dialogue and document it’

PERFORMANCE MANAGEMENT AT RAYTHEON INC (1) Track performance Set goals Performancedialogue Evaluate and reward

PERFORMANCE MANAGEMENT AT RAYTHEON INC (2) Performance dialogue – frequent and open interaction between employees and their leaders that begins with mutual goal setting and continues with the recognition of accomplishment, the reinforcement of desired behaviours. Setting goals – corporate goals set for customer satisfaction, people growth and productivity. These are cascaded to individuals. Tracking performance – performance feedback provided throughout the year; individuals also track their own performance. Evaluating and rewarding performance – evaluation of performance takes place every day but individual performance is summarized at least annually in the performance review. The leader assesses strengths and areas for improvement and agrees training and development plans. Rewards are linked to performance at company, programme, team and individual levels.

PERFORMANCE MANAGEMENT AT THE SCOTTISH PARLIAMENT (1) Purpose To support the Scottish Parliament in fulfilling its constitutional role as a representative and legislative body by providing professional advice and services of the highest standards. Aim To be an organization in which we all behave corporately and are properly trained, informed, involved, motivated and rewarded, and to which we are proud to belong.

PERFORMANCE MANAGEMENT AT THE SCOTTISH PARLIAMENT (2) Achieving purpose and aim: Be simple to operate Establish a clear link between business and individual objectives Ensure commitment to our values and culture Ensure that skills and knowledge and behaviour (competencies) are reviewed Generate a thorough and continuing review of training and development needs Enable us to continue to improve the organization’s performance Ensure we can identify and reward exceptional performance and contribution Identify good and bad performance clearly

MANAGING PERFORMANCE AT STANDARD CHARTERED BANK (1) management process Manager–employee interaction Senior management sponsorship Living the values Clear expectations Outcome measures Promote differentiation Emphasize strengths Accurate/fair feedback Regular open dialogue Under-performance not tolerated Knowledgeable managers Two-way communication Managed risk taking Reward excellence Managing performance is critical Manage accountability High performing organization Focus on the best Talent management Expect excellence Strengths based

MANAGING PERFORMANCE AT STANDARD CHARTERED BANK (2) The process Global for all employees Accelerate a high performing organization Objective setting (January) Financial/business objectives Two core management objectives Values objectives for all Performance coaching throughout the year Regular open discussion: integrates performance, learning and development, reward and individual engagement addresses performance issues under-performance not tolerated Final review (Nov/Dec) 1–5 business rating scale A–D values rating scale Additional feedback form Cascaded ‘level down’ rating reviews Interim review (July) Formal step-back ‘Tracking’ rather than ‘rating’

MANAGING PERFORMANCE AT STANDARD CHARTERED BANK (3) Top management impetus Common top team agenda cascaded Chair and CEO personally write to top performers Communications style – integrated messages Senior leadership on performance issues CEO performance bonus levelling of top 1,000 managers CEO’s ‘big call’ – 2,000 managers Top 300 leaders monthly calls – emphasize key performance management behaviours

MANAGING PERFORMANCE AT STANDARD CHARTERED BANK (4) ‘Living the values’ Responsive Trustworthy Creative International Courageous Behavioural indicators Discussion – agree relevant behaviours Assess against behaviours: rating A–D

MANAGING PERFORMANCE AT STANDARD CHARTERED BANK (3) Employees’ rights To know how well we are doing To know what is expected of us To know what we need to do and learn to improve and progress

THAMES VALLEY POLICE PERFORMANCE AND DEVELOPMENT REVIEW PROCESS Key to the performance management strategy Establishes strong employment relationships Provides a route to individual, team and organizational performance planning Secures future training and development provision Creates more visibility for career paths, competencies and behaviours across ranks and roles

UNILEVER (1) PERFORMANCE DIFFERENTIATION TOOLKIT Objectives Continuously ‘raise the bar’. Audit our collective strength. Focus on the ‘current reality’ to gain agreement on our view of staff with: – high potential; – high performance – are we stretching and rewarding these people appropriately? – standard performance – how to further motivate? – development needs – how can we maximize performance? – performance concerns – what can we do about poor performers; do we turn them around or move them from role?

UNILEVER (2) Assessment areas Skills Performance Competencies and living values Experiences

UNILEVER (3) Assessment and action HOW WHAT Inconsistent in meeting expectations Consistently meeting expectations Inconsistent in meeting agreed individual business targets Consistently meets individual business targets Possible actions: reward set milestones provide feedback training coach to improve delivery recognize and reward challenge/stretch expose coach coach/monitor/track decision to continue or end employment mentor/coach to improve acknowledge contribution

Consequence management: UNILEVER (4) Process flow Line manager: Discusses with employee at performance and development meeting: delivery against targets behaviour against competency framework and values Leadership team: compares evidence calibrates judgements discusses what else makes individual managers successful or unsuccessful Consequence management: communicate feedback and consequence to individual agree development plan with individual manage under-performers

UNILEVER The leader’s mindset I have to communicate my performance expectations with my employees. Fairness and honesty impacts behaviour and performance. Focus on utilizing strengths to the maximum and closing gaps. The employee needs to take ownership for his/her development with my support. It is my role to support by coaching, mentoring, leading and managing conversations. I have to differentiate among people in my assessment and coaching.

PERFORMANCE MANAGEMENT AT THE VICTORIA & ALBERT MUSEUM Job description (updated) Evidence (departmental) Corporate plan Evidence (individual) Departmental objectives Performance standards Individual objectives Attributes Personal development plan Ratings – pay decisions Assessment Countersigning officer review