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2 Pay for Performance System Key Questions What is a pay for performance system? What are the key drivers for a pay for performance system? What are the benefits of a pay for performance system? What can managers/supervisors do to make the pay for performance system a success? February 20102

3 Definition of a Pay for Performance System Pay for performance systems are systems in which pay decisions are based on defined performance levels rather than entitlement, tenure, or other non-performance related factors Pay decisions include:  Merit-based pay increases  Lump sum bonuses February 20103

4 Drivers of Pay for Performance Systems Pay for performance systems emphasize achieving greater individual and organizational performance results Need for more flexible compensation practices to Agency specific needs February 20104

5 Benefits of a Pay for Performance System Rewards high performers Allows greater flexibility for recruiting and hiring top talent Provides opportunities for developing poor performing employees Increases employee motivation Contributes to employee retention Deals more effectively with marginal employees February 20105

6 Pay for Performance Guidance 1. Make the pay for performance process transparent  Managers/supervisors can ensure that employees are informed about the pay for performance system, understand how the system will impact them, and what employee and management roles and responsibilities are under the new system 2. Provide training for managers/supervisors  While managers/supervisors cannot necessarily control the extent to which training is adequate, you can actively pursue information about the new system to make sure that you have the resources, tools, and skills needed to be successful February 20106

7 Pay for Performance Guidance 3. Provide accurate assessments on employee performance  Ensure success of this system by providing honest, accurate assessments of employee performance based on articulated performance objectives and performance benchmark standards to truly distinguish employee performance 4. Evaluate employees solely on performance elements  A responsibility to clearly articulate individual performance expectations to employees and to only evaluate them on those expectations February 20107

8 Understanding the CAPS Performance Appraisal Process Key Questions What is the performance appraisal process? What are the responsibilities of Rating Officials, Pay Pool Managers, and Employees? What other pay-related interventions (other than performance-based pay) are available to managers/supervisors to reward employees for good performance? How can managers/supervisors acclimate new employees to the performance appraisal process? February 20108

9 Intent of CAPS Performance Appraisal System Encourage high performance Encourage continuous dialogue between supervisors and employees Provide a basis for performance-related decisions (e.g., pay increases, bonuses, PIPs) February 20109

10 Performance Management 1. Planning Set goals and measures Establish and communicate elements and standards 2. Monitoring Measure performance Provide feedback Conduct progress review 3. Developing Address poor performance Improve good performance 5. Rewarding Recognize and reward good performance 4. Rating Summarize performance Assign the rating of record Five Key Components February

11  Recognition  Acknowledge employee ideas  Acknowledge significant contributions in writing Non-Monetary Ways to Reward Your Employees February

12 Components of the CAPS Performance System  Performance Indicators  “E” for Eligible, “N” for Not Eligible, “P” for Pending, or “U” for Unsatisfactory  Performance Plans  Prepared by rating official with employee input  Approved by Pay Pool Manager  Critical elements only – minimum of 2/maximum of 6  Performance Standards  Benchmark standards  Supplemental standards  Performance Scores  100-point scale using benchmark standards February

13 February – Benchmark Performance Standards

14 February Summary Guidance for Benchmark Performance Standards  Assists managers in evaluating employees with benchmark performance standards  Used to help make distinctions between different levels of performance  Helps ensure greater consistency in the analysis and evaluation of performance ratings  Approved by the CAPS Board in 2005

15 February Performance Attributes 0 – 39%40 – 59%60 – 79%80 – 100% Work Results Work not successfully completed Minimally acceptable work results Work results were accurate, effective and efficient Exemplary work resulted in maximum impact Guidance Failed to follow directions, guidance and procedures Procedures were minimally correct Minimal guidance required; brought suggested revisions to supervisor's attention Guidance rarely, if ever, required Initiative/ Independence None Rarely offered to provide additional support Developed proposals for new tasks and activities with input from supervisor Continuously found new and better ways of performing work Knowledge Insufficient technical knowledge/skill General technical understanding Superior technical knowledge in all tasks Exceptional technical knowledge; beyond expectations for position Quality Work did not meet minimum specifications Products were completed with adequate quality Consistently above average quantity/quality of work Exceptional quality, rarely room for improvement; serves as benchmark Originality None Products met stated requirements Originality and creativity in assignments Exceptional originality and creativity Problem Solving Routine problems were not resolved satisfactorily Routine problems dealt with satisfactorily Complex problems addressed as they became known and dealt with skillfully and resourcefully Unforeseen problems solved with dedicated perseverance; conflicts anticipated and avoided through creative alternatives Communication Written and oral communications poor and not understandable Written and oral communication generally understandable Written and oral communications clear, convincing and effective Complex ideas presented clearly to varied and diverse audiences; desired outcome achieved Cooperation Exhibited uncooperative/unresponsi ve behavior Reasonable degree of cooperation with others Promoted positive and productive relations Forged new cooperative relations (internal and external) Organizational Prestige Negative impact to organization Minor impact to organization Increased organizational prestige and recognition Enhanced world class reputation of organization Timeliness Work unacceptably late The majority of final work products submitted by established deadlines, but required rework or major editing Final work products submitted by established deadlines without the necessity for rework or major editing required Work often completed early Leadership Poor leadership skills; provided no positive direction to staff Sufficient leadership skills Outstanding leadership skills; predetermined goals always attained Exemplary leadership skills; goals consistently surpassed Administration Unable to organize and prioritize work and/or wasted time Able to organize work sufficiently to meet deadlines without too many delays Made appropriate, useful suggestions to improve administrative processes Derived and implemented improvements in administrative processes Teamwork Ineffective in working with others Demonstrated reasonable cooperation in working with others Contributed positively to group Initiated suggestions to better group Summary Guidance for Benchmark Performance Standards

16 February Supplemental Standards  Defined in terms of results – “what” and “how”  Expressed in terms –  Quality  Quantity  Timeliness  Cost Effectiveness  Written at the “Eligible” Level  Use of Supplemental Standards is Optional

17 Responsibilities of Rating Officials Develop performance plan with employees Conduct progress reviews with employees Modify performance plan with employees as needed Conduct performance review meetings to discuss accomplishments Recommend ratings, scores, payouts, and bonuses to Pay Pool Manager through any intervening higher level supervisor(s) Conduct evaluation feedback meetings with employees February

18 Responsibilities of Pay Pool Managers Approve performance plan/plan modification Manage the pay pool Ensure consistency across rating officials Discuss with rating officials any discrepancies and/or the need for score adjustments Render final decision on ratings, scores, performance increases, and bonuses February Pay Pool: A grouping of employees who are combined together for performance-based pay decisions

19 Responsibilities of Employees Create performance plan with Rating Official Modify performance plan with Rating Official Clearly, concisely, and accurately document accomplishments over past year Seek out performance feedback throughout year Respond to performance feedback February

20 Pay for Performance Flexibility Pay increases upon promotion  Managers/supervisors may recommend employee’s salary anywhere within the band when promoted. Minimum of 6% pay increase. Performance bonuses  Rewards high performers, with intent to motivate performance Supervisory performance pay  Managers/supervisors at band’s pay ceiling max may receive up to six percent higher through performance February

21 Comparability Increases All employees will receive the annual comparability increase except: Employees with an “Unsatisfactory” rating Employees on a PIP at time of comparability increase  Employees on a PIP will receive comparability increase at the time they successfully complete a PIP  Payment of ACI not retroactive February

22 Acclimating Employees to the Performance Appraisal Process Employees must have a clear understanding of performance expectations Employees will do well if they understand how performance is linked to success Feedback provides employees with an understanding of level of performance Employees want to understand if their performance is meeting management expectations February

23 Managing and Evaluating Employee Performance Key Questions How can managers/supervisors identify the linkage between organizational goals and work unit/team goals and objectives? How can managers/supervisors help employees establish performance elements that are linked to organizational goals? How are performance plans created? How can managers/supervisors effectively evaluate performance? February

24 Linking Individual Performance to Organizational Goals Identify overall organizational goals and discuss how they are linked to your work unit/team objectives Discuss the work unit/team objectives and/or specific products or services and how they are linked to performance plan critical elements Explain the rationale of how each critical element is weighted; the activities under each element; and the relationship of the elements to the work unit/team objectives February


26 Brainstorm Task List  Consider the whole job  Look to the coming year for new assignments, resources, priorities, policies  Teamwork makes up part of the organization’s fabric: Helping others work Information sharing  Use active verbs – e.g., manage, develop, plan, etc. February


28 Choose Measurements February Quality Quantity Timeliness Resource/Cost

29 Effectively Evaluating and Documenting Employee Performance Provide employees with tips for writing a good accomplishment statement  Keep records of accomplishments during rating cycle  Summarize all accomplishments for the year by Critical Element  Do not understate or overstate accomplishments  Establish a format for accomplishment statements to maintain consistency and quality (e.g., bullets vs. narrative)  Discuss the desired format February

30 Evaluating and Documenting Employee Performance Evaluate the employee’s performance  Accurately and objectively  Use specific language to describe key achievements or deficiencies (e.g. work examples, address the critical activities under each element, use positive wording when appropriate) February

31 Rating Eligibility An Employee is Ratable if: Occupies a covered position as of Sept 30 AND Has worked at least 120 days in one or more covered positions An Employee is NOT Ratable if: Does not meet conditions stated as Ratable Employee has been placed on an approved Performance Improvement Plan (PIP) February

32 Concept of Intervals Each pay band is divided into 5 intervals. Intervals 1-3 are for non-supervisory positions and intervals 4 & 5 are for supervisory positions. Pay progression potential is faster at lower pay bands and lower intervals in pay bands. Based on OPM statistical study of Federal employee occupational salary histories. February

33 Intervals and Potential Pay Increases February ZA - ADMINISTRATIVE BandIntervalIncrease V (GS 15) 4 – 50% – 4% 3 20% – 5% 10% – 6% IV (GS 13–14) 4 – 50% – 6% 3 2 0% – 8% 10% – 10% III (GS 11–12) 4 – 50% – 7% 3 20% – 12% 10% – 15% ILLUSTRATIVE ZA – ADMINISTRATIVE (CONT.) BandIntervalIncrease II (GS 7–10) 4 – 50% – 8% 3 20% – 16% 10% – 20% I (GS 1–6) 4 – 50% – 7% 3 20% – 12% 10% – 14%

34 Payout Rules Highest scored employee receives highest relative percentage payout (% of %) Lower scored employees cannot receive a greater relative percentage payout Tied scores might not receive same relative percentage payout February

35 Providing Effective Performance Feedback Key Questions How can feedback improve employee performance? What are strategies that managers/supervisors can use to provide effective feedback? What are the ramifications of providing inadequate, poor, or untimely performance feedback? What communication barriers may arise and what can managers/supervisors do to overcome them? February

36 Performance Feedback Is An Ongoing Process Reviewing Work Conducting Progress Reviews and Annual Appraisals Addressing Performance Issues Maintaining open lines of communications February

37 Performance Feedback Strategies Provide continuous constructive feedback Prepare the employee for the discussion in advance Be clear on the purpose of the meeting Have a clear message Be specific Emphasize the positive February

38 Performance Feedback Strategies Be timely Focus on accomplishments Respect the individual Leave communication lines open February

39 Consequences of Ineffective Feedback Employees may not focus on performance goals and expectations. Employees may lose motivation Employees may become disgruntled Low employee morale Unexpected turnover Grievances February

40 Communication Barriers Communication styles Use of verbal and non-verbal language Lack of trust February

41 Overcoming Communication Barriers Familiarize yourself with communication styles of your employees Understand what motivates your employees Become aware of your communication style and modify as necessary to be effective February

42 Providing Feedback Establish a relaxed environment Engage in a 2-way dialogue Highlight positive or good behavior Keep the conversation focused on performance issues Maintain control of the conversation Offer constructive criticism February

43 Providing Feedback Don’t be confrontational Don’t be accusatory Don’t only focus on faults or mistakes Don’t bring personal issues into the discussion Don’t become agitated or angry February

44 Managing Marginal Performance Key Questions How can managers/supervisors successfully identify a marginal performer? How can managers/supervisors help marginal performers become high performing employees? What options do managers/supervisors have for managing marginal performance? February

45 Identifying Marginal Performance Missed deadlines Decreased productivity Lack of dependability Lack of proficiency Failure to perform current work assignments February

46 Understanding Causes of Marginal Performance Ask Yourself: What is it about the person’s performance that has a negative effect on the work being done? What are things I actually see and hear that indicate there is a problem? Does the employee know that there is a performance issue? Have I clearly communicated performance objectives and expectations ? February

47 Understanding Causes of Marginal Performance What aspects of the employee’s performance needs to change in order to convince me that the employee has improved? Are there obstacles or barriers to the employee performing well (e.g. work environment, training)? Is the problem marginal performance or misconduct? February

48 The failure to follow a workplace rule (whether written or unwritten). Examples of misconduct include tardiness and absenteeism, insubordination, and failure to follow instructions. The failure of an employee to do the job at an acceptable level. February

49 Managing the Marginal Performer Address marginal performance early Document all evidence relating to that employee’s low performance level Schedule performance review meetings with the employee Be prepared to take appropriate action February

50 Tips for the Meeting Avoid referring to the situation beyond the impact it has on the employee’s performance Engage the employee in the discussion to obtain their perspective on the matter Limit the discussion to job related issues February

51 Managing Continued Marginal Performance Readdress the issue with the employee and discuss the causes for lack of progress Continue to work with the employee to address and overcome performance issues Determine whether or not the employee is still a good match for the position Explore alternative options for managing the employee February

52 Managing Marginal Performance Under CAPS Managers/supervisors have more options available for managing a marginal performer (e.g., developing a PIP, tailoring responsibilities, little or no pay increases) Employees have a more vested interest in their performance throughout the year February

53 Helping Employees who are Failing  Develop and set specific expectations and standards  Closely monitor performance  Assign the employee a “mentor”  Give specific and timely feedback  Consider training, where appropriate  Provide work assignments that build confidence  Help employee plan and prioritize their work  Determine if the performance problem is a result of a non-work issue February

54 Grievance Procedures 15 calendar days to file a request for reconsideration (informal grievance) 15 calendar days to formally respond to informal grievance 10 calendar days to file formal grievance with WFMO 15 calendar days for WFMO to review grievance 45 calendar days for Deciding Official to respond to formal grievance February

55 Grievance Rights Grievable – Performance Score – Rating – Pay Increase Not Grievable – Performance Plan – Bonus Decisions February

56 Additional Information  For further information or questions, please contact your Servicing Workforce Management Office Representative  WFM website – A-Z, C for CAPS Information  DOC CAPS Resources Page Leave/DEV01_ Leave/DEV01_ February


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