2 Performance Management Cycle Setting Objectives, defining what is neededPerformance PlanningReset objectivesEnabling staffto deliverMake changesActionStaff and the OrganisationPerformance and DevelopmentReviewingTaking stock of achievements, diagnostics
3 The Performance Cycle Major Areas of Responsibility Individual PrioritiesKnowledge, Skills andBehaviorsDevelopment planReaching agreementEnd-of-cycle reviewContinuous progress and developmentOngoing FeedbackOngoing FeedbackCoachingInterim reviews
4 Alignment Model “How” “What” Performance Development Process Mission YourMissionHARVARD COLLEGE LIBRARY“What”“How”OrganizationalPrioritiesValuesDEPARTMENTUNIT ORDepartmentalPrioritiesKnowledge, Skills and BehaviorsYour Major Areas of Responsibility and Individual PrioritiesPERSONALPerformance Development Process
5 The Performance Cycle 2001: December 21 2002: June-July 2002: May 2002: April-MayOngoing Feedback2002: March2002: December-January
6 What Is “Good Performance”? More than just activities, effort, good intentions, or resultsWorking hard and staying busy are not necessarily high performanceAttending training sessions and studying hard does not necessarily lead to good performanceStrong commitment may not lead to good performanceEven accomplishing some goals may not be high performance
7 Performance Management – Broader Than Performance Appraisal Begins with a look at goals & strategies of the organization
8 Organizational Alignment …a key to Performance ManagementAll efforts must be aligned with overall goals and strategies of the organization.
9 Performance Management a Cascading Process Mission, goals, and strategies should be defined, and clearly understood by everyoneHow do all tasks contribute to overall plans for the organization?
10 Annual Plans Should Create Performance Standards for Each Department These should translate into performance goals for each workerQuantityQualityTimeCost
11 What Are the Three Steps in Performance Management? Defining PerformanceFacilitating PerformanceEncouraging Performance
12 Performance Appraisal Developmental and Administrative Decision Processes
13 Performance Appraisal continues to be one of the most criticized HR functions in organizations
14 Performance Appraisal We all measure our subordinates’ performance whether we do it formally or informallyVery important to document what we evaluateAlso necessary to show a clear link between what we evaluate and job requirements
15 What Purposes Can P.A. Serve in an Organization? Any potential conflicts here? Explain.
16 How Frequently Should Performance Appraisal Be Done? Why?
17 Performance Appraisal - a Continuing Process Is not a once-a-year or once-a-quarter experienceEffective appraisal occurs frequentlyThere should be no surprises when an employee is given his or her formal appraisal interviewEssential for coaching & positive motivation
18 The Main PointBe sure that what is measured is documented & can be shown to match job expectations
19 A Key to All of This:Supervisors must have the support & encouragement of higher management to make all this work
20 Behavior - Oriented Systems Ranking MethodsStrait RankingHigh-Low (Alternate Ranking)Paired ComparisonForced Distribution (similar to ranking)Graphic Rating Scales
32 Results (Outcome) Based Appraisal Management by Objectives (MBO) in Some Form is Commonly UsedFocuses on Measurable Results of Mutually Agreed-Upon Goals for a Work Cycle
33 MBO Steps in development and usage? Potential strengths and weaknesses?
34 Factors to Consider in Choice of a P. A. System CostUsefulness in employee developmentUsefulness in administrative decisionsValidity
35 What Do You Think?What Form of Performance Appraisal Would You Recommend?What Criteria Have You Used in Making Your Recommendation?What Limitations (As Well As Strengths) Does Your Recommended Method Have?
36 Who Appraises?SupervisorPeersSubordinatesSelf AppraisalCustomers
38 360 Degree Appraisal Best Known Book on the Subject: Edwards & Ewen, 360 (degree) Feedback, Amacom, 1996.
39 Three Types of Appraisal Interviews Tell & SellTell & ListenProblem Solving
40 Performance management Definition:Employee performance management is the process of involving employees in accomplishing your agency’s mission and goals.Employee performance management includes: planning work and setting goals, monitoring performance, developing capacity, reviewing performance, and rewarding good work.Peter Scholtes used to say unpack your performance appraisal system. It does too much!!!!
41 Designing the performance management system What will be the purpose?What will be the sequential stages?What performance will be measured?Who will assess employee performance?What will be on the form?Will a rating scheme be used?What support systems need to be in place?
42 Managing performance for … AccountabilityPerformance target setting and outcome/results reviewAND / OR
43 Managing performance for … EmployeeDevelopmentCompetence assessment and development
44 Stages of performance management PlanMonitorDevelopReviewReward
45 Stage 1 – Individual Performance Planning Stage 1 – PlanningWork goalsCompetenciesLearningPlanPerformance planning at the start of the year and then periodically is the core of the performance management process. The performance plan should be a written document.
46 Performance planningHow is what I do on a daily basis tied to the success of this organization?What are my performance goals for the next time period?How are my goals aligned with the organizational goals?
47 Performance Planning Performance results – the what Performance outcomes or standards – from job descriptionPerformance objectives for the next time periodPerformance behavior – the howCompetencies, performance factors, or behavior expectationsDevelopment objectives
48 Peter DruckerManagement by Objectives was first outlined by Peter Drucker in 1954 in his book 'The practice of Management'. According to Drucker managers should avoid 'the activity trap', getting so involved in their day to day activities that they forget their main purpose or objective. One of the concepts of Management by Objectives was that instead of just a few top-managers, all managers of a firm should participate in the strategic planning process, in order to improve the implementability of the plan. Another concept of MBO was that managers should implement a range of performance systems, designed to help the organization stay on the right track.
49 MBO is a system in which specific performance objectives are jointly determined by subordinates and their superiors, progress toward objectives is periodically reviewed, and rewards are allocated on the basis of this progress.
50 MBO Principles Cascading of organizational goals and objectives Specific objectives for each memberParticipative decision makingExplicit time periodPerformance evaluation and feedback
51 Objectives should be specific, attainable, yet challenging. Is the objective appropriate for the business at this time?Does it take the organization in the direction it wants to go?Does it support the overall mission of the business?Is it compatible and complementary with the other objectives?Is it acceptable and understandable to the majority who will be charged with implementing it?Is it affordable for the organization?Is it measurable and achievable?Is it ambitious enough to be challenging?
52 Hierarchy of objectives Vision Mission Goals Objectives Policies Procedures
53 MBO substitutes for good intentions a process that requires rather precise written description of objectives (for the period ahead) and time-lines for their monitoring and achievement. The process requires that the manager and the employee agree to what the employee will attempt to achieve in the period ahead, and (very important) that the employee accept and buy into the objectives (otherwise commitment will be lacking).
54 SMART Management by Objectives introduced the SMART method for checking the validity ofObjectives, 'SMART':SpecificMeasurableAchievableRealistic, andTime-related.
55 Stage 2/3 – Monitor and Develop Daily performance management!Monitoring includes measuring performance and giving feedback. Two way communication between the manager and employee throughout the performance period is critical to the performance management process.DevelopStage 2/3 – Monitor and DevelopFeedbackCoachAdjust goals
56 Daily performance management Feedback and coaching – informalMonitoring and tracking performance against standards and progress toward goals.Quarterly performance planning and performance discussionsDevelopment through coaching, training, challenging or visible assignments, improving work processes
57 What performance will be measured? Behaviors – how the work is donePerformance factors / competenciesRequired behaviorsBehaviors supporting desired organizational cultureResults – what is achievedPerformance outcomesPerformance compared to job standardsPerformance goals and/or objectives
58 Stage 4 – Performance Review The formal process of documenting results the employee has achieved and behaviors and /or competencies displayed should occur at least once a year.ReviewStage 4 – ReviewAt least annuallyDiscussDocument
59 Performance Review Summary of performance over a period of time Evaluate performance results and behaviorsConducted face-to-face with a written record.While rating and ranking has both pros and cons, a summary rating of each employee may be useful.
60 If a rating scheme will be used Number of levels: three, four, five, or sixRating labelsNumerical: e. g. 1, 2, 3, 4, 5Behavioral frequency: e. g. always, usually, frequently, sometimes, rarelyEvaluation: e. g. distinguished, superior, competent, fair, marginalPerformance against a standard: e. g. exceeds, meets, does not meet
61 Who will assess performance? Choices include:Immediate supervisor onlyIn addition to the immediate supervisorEmployee (self)Peers and coworkersInternal and external customersSubordinates
62 Approaches to designing an appraisal form Trait basedBehavior basedCompetencies (or performance factors)BehaviorsResults basedPerformance outcomesObjectives
63 What will be on the form? Identifying information Instructions Performance outcomes and/or results achieved (or not achieved) on objectivesPerformance factors / competencies / work behaviorsEmployee signature and approvals
64 Other information Employee comments Summary of one to three major achievementsStrengths / areas for developmentOverall ratingPlan for development (if not elsewhere)Performance plan for next period (if not elsewhere)
65 Stage 5 – RewardGood performance should be rewarded. Recognition and non-monetary rewards are an important part of the reward structure. These include job-related rewards such as visible project assignments. Even thank you and recognition for a job well done are rewards!!RewardStage 5 – RewardMonetaryNon-monetaryRecognition
66 Rewards, recognition, and compensation Recognizing employees for performanceNon-monetary rewardsInformal and ongoing acknowledgements of good workCompensationMerit increases?Pay to market?Increases added to base pay or lump sum?Separate conversation about pay from conversation about performance!!!!!
67 What support systems need to be in place? Senior management supportManagement accountabilityCommunication about the processTrainingProcess for new employeesProcess for dealing with poor performanceMonitoring and evaluating the process (HR)Appeals process (HR)
68 Communication Timeframe for the performance management cycle Instructions for the supervisorInstructions for the employeeTie to other systemsSupport available
69 Sample schedule for the performance management cycle Complete operating planUpdate quarterly performance plan form with major agency objectivesConduct training for supervisors (and employees)Communication before, during, afterTimeframe for completion of appraisalTimeframes for quarterly performance plansInterface with compensation schedule
70 Dissatisfaction with Appraisals 95% of companies use appraisals , majorityare dissatisfied with them (Wall Street Journal)90% of appraisal systems unsuccessful(SHRM, 1995, DDI, 1993)“I’d rather kick bricks with my bare feetthan do appraisals” (manager at Digital Corp)Many companies abolished ratings:Pratt & Whitney Blockbuster IBM Albany Intern
71 Performance Appraisal PurposeControl BehaviorSet StandardMeasure PerformanceCompare Performance Against StandardIf Discrepancy Exist, Take Corrective ActionUsed to Provide FeedbackUsed as Basis of Reward & Punishment SystemsUsed for System Improvement
72 Performance Management Reward or TakeCorrective ActionReward or TakeCorrective ActionSet StandardsMeasurePerformanceProvide Feedback
77 Goal is to Accurately Appraise Performance Performance MeasuresSubjective Measures - Performance MeasuresWho Rates? Supervisors, Peers, Subordinates, SelfErrors & BiasesHalo ErrorCentral TendencyLeniency (Positive & Negative)Goal is to Accurately Appraise Performance
78 Methods Ranking - Rank order ratees from highest to lowest Behavioral Checklist - Series of Descriptive Statements of Job-Related BehaviorExample: ____ Comes to class on time____ Courteous with clients____ Sleeps on the jobForced Distribution10% % 40% % %Poor Below Average Above ExcellentAverage Average
79 MethodsAdvantages (Forced Distribution) : Decreases Central Tendency & Leniency ErrorsDisadvantages (Forced Distribution): May not be accurate reflection of performanceGraphic Rating Scale - Most Widely UseQuality(1) (2) (3) (4) (5)Poor Below Average Above ExcellentAverage AverageBehaviorally Anchored Rating Scale - Based on critical incidents, Behaviors are anchors
80 Police Officer: Job Knowledge MethodsBehaviorally Anchored Rating ScalesPolice Officer: Job KnowledgeHigh (7, 8, 9) Follows correct procedures for evidence preservationAverage (4, 5, 6) Seldom has to ask other about points of lawLow (1, 2, 3) Misinforms the public about laws
81 Progressive Disciplinary Systems Steps1) Counsel Employee about Performance Problem2) Verbal Reprimand & Warning3) Written Reprimand & Warning4) Disciplinary Layoff (Short-term)5) Discharge
82 Progressive Disciplinary Systems Reasons to Avoid DischargeUnfair Labor Practice (Legal & Contractual Restrictions)Company Payments Toward Unemployment & Severance PayStrikesCourt Action - Back Pay AwardsInvestment in Human Resources
83 Problems with Appraisals Survey by Ernst & Young showed that 38% of employees say they are rated unfairly or not at allDeming argues that Performance Appraisal is “A Deadly Disease in Organizations”Disregards existence of systemErroneously attributes variation in performance to individuals (85-15 rule)Undermine teamwork, improvementFocuses on short-term, end product
84 Appraisal Interviews Give Feedback daily Encourage participation Judge performance not personalityBe specific - provide critical incidentsSet mutual goals