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16 PERFORMANCE MANAGEMENT Contents
1 Performance management defined 2 Performance management: five questions 3 The performance management cycle 4 The performance management sequence 5 What performance management is 6 What performance management is not 7 Performance management principles 8 Developments in performance management 9 Performance management activities 10 Performance agreement 11 Characteristics of good objectives 12 Agreeing competency requirements 13 Classification of performance measures 14 Performance measures criteria 15 Performance reviews: key features 16 Preparing for the meeting: the manager’s role 17 Preparing for the meeting: the individual’s role 18 What to find out at a review meeting 19 Conducting a review meeting 20 Performance review questions 21 Listening 22 Giving feedback 23 Managing under-performers 24 Performance management at Astra-Zeneca (1) 25 Performance management at Astra-Zeneca (2) 26 Performance management at Astra-Zeneca (3) 27 Performance management at the Victoria & Albert Museum 28 Performance management at Halifax degree feedback: definition and rationale degree feedback model degree feedback methodology 32 Example of 360-degree profile 33 Balanced scorecard 34 Introducing performance management 35 Performance management: the big issues 36 What’s it for? 37 Do we have rating? 38 How do we get buy-in from line managers? 39 Performance management: key considerations
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PERFORMANCE MANAGEMENT DEFINED
A strategic and integrated approach to delivering success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.
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PERFORMANCE MANAGEMENT: FIVE QUESTIONS
What do we mean by performance? Can we identify good or poor performance? Can we establish the cause of good or poor performance? How can we motivate people to perform well? Can we do all this fairly and consistently?
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THE PERFORMANCE MANAGEMENT CYCLE DEVELOPMENT AGREEMENT
PERFORMANCE AND DEVELOPMENT AGREEMENT Performance review Managing performance throughout the year
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PERFORMANCE MANAGEMENT SEQUENCE
Structure Job description Tasks & Responsibilities Job Competencies Corporate Strategy Business Plans Goals & Targets Company Competencies Key Result Areas & Competencies Performance and Development agreement Information to compare Performance and KPI’s and Competencies Evaluation Performance against KPI’s & Competencies Feedback on Performance Development Needs Rating & Potential Appraisal Career & Development Plan Development Activities Remuneration Consequences
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WHAT PERFORMANCE MANAGEMENT IS: ITS FEATURES AND CONCERNS
Aims – performance improvement and personal development. Strategic – concerned with how well the business functions in the longer term and with the creation of a culture of performance and continuous development. Integrated – aligns individual goals and values with corporate goals and values. Focus – on outcomes (results) and inputs (competencies). Management of expectations – helps individuals to understand their roles and what they are expected to achieve in terms of both outcomes and competency levels. Measurement, feedback and review – concerned with measuring performance (‘if you can’t measure it you can’t manage it’), feedback to individuals (self-generated or provided by their manager) and the review of outcomes as a basis for planning action. Dialogue – concerned with creating a climate in which a dialogue takes place between managers and individuals to define expectations, discuss outcomes, and agree development plans in order to achieve mutual understanding of what is to be achieved and developing people to ensure that it will be achieved. Continuous – performance management takes place throughout the year. Motivation – a powerful means of motivating people through feedback and recognition, and the identification of opportunities for growth (job enrichment), development (skills acquisition) and career progression. Role of line managers – performance management is owned and delivered by line managers.
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WHAT PERFORMANCE MANAGEMENT IS NOT
The same as appraisal – performance management is about dialogue, agreement and mutual understanding. It is not a top-down system for judging the performance of people. It does not exist simply to produce a performance rating. A system – performance management is not a bureaucratic system that relies upon procedures and forms to generate outputs. It is a process that involves people (managers and individuals) working together continually to reach agreement on what needs to be done and how it should be done. A once-a-year event – the theme of an effective performance process is ‘managing performance all the year round’. Synonymous with performance-related pay – performance management may generate the information that informs performance-related pay decisions but can, and many people think should, be detached from the performance-related pay system so that the proper emphasis can be placed on its developmental purpose. Owned by the HR function – it is for line managers and their staff.
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PERFORMANCE MANAGEMENT PRINCIPLES
performance management is managing the business a management tool which helps managers to manage driven by corporate purpose and values to obtain solutions that work only interested in things you can do something about and get a visible improvement focus on changing behaviour rather than paperwork it’s about how we manage people – it’s not a ‘system’.
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DEVELOPMENTS IN PERFORMANCE MANAGEMENT
system appraisal outputs performance-related pay ratings common top-down monolithic bureaucratic owned by HR process holistic outputs/inputs development less rating 360° feedback adaptable flexible owned by users
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PERFORMANCE MANAGEMENT ACTIVITIES
Performance agreement – an agreement between the manager and the individual on the latter’s objectives and the level of competency required (see slides 10–15). Performance review – a joint review of the performance of the individual by means of a dialogue between the individual and the manager (see slides 16–24). Personal development planning – an agreement on what the individual needs to do with the manager’s support to improve performance and develop skills (see slides in Section 18). Performance-related pay – may be associated with performance management through rating but many organizations believe that performance management is essentially a developmental activity and therefore uncouple performance pay decisions (see slides in Section 23).
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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
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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 time scale.
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AGREEING COMPETENCY REQUIREMENTS
Ideally, a role profile should be available (and regularly updated), which sets out the competency levels required for the role and is aligned to the organization’s competency frameworks. The agreement and review of competencies can then be referenced to this profile. If a profile does not exist, the agreement should be related to the competency framework for the organization or the relevant part of the organization. In the absence of either a role profile or a relevant competency framework, the line manager and the individual have to discuss and agree competency levels for each of the main aspects of the role. The questions that needs to be answered for each aspect are: What knowledge and skills are required to carry out this task well? How will you know that it has been done well?
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CLASSIFICATION OF PERFORMANCE MEASURES
Output – measurable data on results achieved. Outcome (impact) – attainment of defined standard (quality, level of service etc), changes in behaviour, completion of project or task, level of take up of service, successful innovation. Reaction – judgement by others: colleagues, internal or external clients or customers. Time – speed of response or turnaround, achievements compared with timetables, amount of backlog. Finance – income generated, added value, cost control.
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PERFORMANCE MEASURES CRITERIA
related to organizational critical success factors relevant to individual outcomes and competence requirements cover all aspects of performance focus on outputs and outcomes that can be clearly defined verifiable – indicate the data or evidence that will be available as the basis for measurement provide basis for feedback and action.
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PERFORMANCE REVIEWS: KEY FEATURES
forward looking – not a post-mortem exchange of views (dialogue) measurement feedback positive reinforcement constructive leads to an agreement.
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PREPARING FOR THE MEETING: THE MANAGER’S ROLE
assess achievements – performance and development decide on feedback consider factors affecting performance points for discussion future directions and objectives.
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PREPARING FOR THE MEETING: THE INDIVIDUAL’S ROLE
identify achievements consider reasons for any shortcomings development and training needs areas where help or support would be useful future hopes.
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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.
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CONDUCTING A REVIEW MEETING
encourage reviewee to do most of 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.
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PERFORMANCE REVIEW QUESTIONS
Open – encourage the individual to talk. Closed – ask specific questions to elicit information. Probe – ask for further details or explanations of achievements or problems.
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concentrate on the speaker respond quickly
LISTENING concentrate on the speaker respond quickly ask questions to clarify meaning comment as necessary to show understanding.
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build feedback into the job provide feedback on actual events
GIVING FEEDBACK build feedback into the job provide feedback on actual events describe, do not judge refer to specific instances ask questions rather than make statements get people to work things out for themselves select key issues – focus on improvable areas show understanding.
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MANAGING UNDER-PERFORMERS
identify and agree the problem establish reason for shortfall decide and agree on action required resource the action monitor and provide feedback.
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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.
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PERFORMANCE MANAGEMENT AT ASTRA-ZENECA (2)
Stage 1 Business roles Plan Stage 2 Performance planning Evaluate Stage Stage 3 Performance Performance measurement development Do
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PERFORMANCE MANAGEMENT AT ASTRA-ZENECA (3)
Four stages 1. Business role clarification – clear statement of role and objectives agreed. 2. Performance planning – agreement of targets to achieve the ‘plan-do-evaluate’ elements of managing performance. 3. Performance development – agree skills required and prepare individual development plan. 4. Performance measurement – provide ongoing feedback and an annual summary of an employee’s performance (no overall ratings).
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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
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PERFORMANCE MANAGEMENT AT HALIFAX
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360-DEGREE FEEDBACK: DEFINITION AND RATIONALE
360-degree or multi-source feedback involves the assessment of an individual by a number of different people: managers, colleagues, subordinates and clients (external or internal customers) as illustrated on the next slide. It recognizes that the performance of people is best seen from different viewpoints. The manager will only have a top-down and therefore partial impression while important characteristics, for example managing people, leadership and interpersonal relations with colleagues and clients, may not be measurable.
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360-DEGREE FEEDBACK MODEL
Manager Colleagues Individual Customers/clients Direct reports
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360-DEGREE FEEDBACK METHODOLOGY
360-degree processes rely on questionnaires that ask for an evaluation such as ‘How well does … do …? The headings included in the performance management group’s orbit 360-degree questionnaire are: leadership team/player/manage people 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.
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EXAMPLE OF 360-DEGREE PROFILE
Gives useful feedback Establishes good working relationships Open to new ideas Values other’s opinions Recognizes achievements Scale
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BALANCED SCORECARD A method developed by Kaplan and Norton*, which is based on the philosophy that ‘what you measure is what you get’ and emphasizes that: ‘No single measure can provide a clear performance target or focus attention on the critical areas of the business.’ Managers want a balanced presentation of both financial and operational measures. The balanced score card consist of four elements as shown below (these elements are sometimes varied in individual applications while still retaining the principle of ‘balance’). How do customers see us? (customer perspective) What must we excel at? (internal perspective) Can we continue to improve and create value? (innovation and learning perspective) How do we look to shareholders? (financial perspective) * Source: Kaplan, R S and Norton, D P (1992) The balanced scorecard – measures that drive performance, Harvard Business Review, January–February
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INTRODUCING PERFORMANCE MANAGEMENT
define purpose define approach involve line managers and staff in its development pilot test produce guidelines on the process inform all employees train managers and all other employees in the process and the skills required.
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PERFORMANCE MANAGEMENT: THE BIG ISSUES
What’s it for? How do we get fairness and consistency? Do we have rating? How do we get management buy-in?
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WHAT’S IT FOR? Essential to be clear about its purpose, eg developmental, enhancing a performance culture, and to communicate that purpose to everyone.
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DO WE HAVE RATING? In many organizations ratings (eg A = excellent, performs well above expectations, B = performs above expectations, C = meets expectations and D = performs below expectations) are an essential part of performance management as a means of summing up judgements and providing the basis for performance-related pay. However a growing number of organizations reject ratings because: they cannot convey the subtleties of the outcome of a thorough performance review they are judgemental and top-down – based on managerial opinion (which can be biased and inconsistent) and which is passed down to the individual if they are linked directly to performance-related they divert the attention of both parties away from the primary purpose of performance management, ie performance improvement and development, to limited considerations of the financial outcome of the process.
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HOW DO WE GET BUY-IN FROM LINE MANAGERS?
The biggest issue in performance management is getting line managers to do it well (or even to do it at all). Many line managers plead that they haven’t enough time and it’s a waste of time anyhow (they claim that they are doing it already which may or may not be true). To overcome this problem it is necessary to: obtain strong backing from the top – one of the core values of the organization, which they should promote, should be that performance management processes play an essential part in the effective management of the organization and managers will be expected to support this value involve line managers in the development of the process to achieve ‘ownership’ provide training, guidance and encouragement to line management (this is the role of HR) enlist the support of enthusiastic and capable line managers to act as coaches and mentors for their colleagues include the management of performance as a key performance criterion for line managers review the performance of line managers in this respect and require performance improvements (the responsibility of the manager’s manager right up to the top).
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PERFORMANCE MANAGEMENT: KEY CONSIDERATIONS
performance management is about running the business, it is what managers do – a natural process of management success depends on what the organization is and needs to be in its performance culture it is the process that is important not the system focus on development, not pay based on accepted principles but operates flexibly effective communication, involvement and training essential.
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Your Experience As employee Positive Negative As manager
Main Topics for Improvement ?
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Performance Management Practice
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Topics to discuss What is Performance Management What are methods
What are procedures The use of Performance Management
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What is Performance ? Performance = f ( A, M, O)
A = Abilities (Knowledge, Skills, Competencies) M = Motivation (Personality, Motivation, Drive, Interest) O = Opportunities
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Aims of Performance Management
Overall: Increase the performance of the employee and the team where he/she works, and by doing that, increase the performance of the organisation (remember the components of performance in the culture questionnaire) Specific 1: Provide feedback to the employee about his/her performance against the competencies of the job and the organisation Specific 2: Improve knowledge, skills, competencies Improve motivation, drive, interest and commitment Provide employee with opportunities to grow and to develop
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Experience 1 In many organisations completing the appraisal form is more important rather than the discussion with the employee about the performance Appraisal forms are mainly used for administrative purposes (checking if everybody is evaluated) The conclusions are used for remuneration purposes For many employees the process of performance management (or appraisal) is a ‘black box’
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Experience 2 Providing feedback is most important in performance management Focus on the performance review meeting Use forms and procedures as a tool and not as objectives in itself A blank sheet of paper with some comment could be more useful than a highly sophisticated form which is not discussed
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Experience 3 Most managers don’t like it
Esp. providing feedback to the employees It would take to much time for them Many HR managers / HR professionals see it as a necessary evil Esp. chasing the managers to do it and to provide them with the results Dealing with complaints from employees However, most employees like it ! They are eager to get feedback and to develop (remember the graph with satisfaction at work and at organisation)
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Performance Management Process
Rewarding Performance Evaluating Performance Developing Performance Monitoring & Feedback Planning & Goal Setting Managing Performance
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Roles and Responsibilities
HRM Communication Preparing System & Procedures Getting commitment of top management Providing forms Training managers Collecting forms after review meeting Administration Follow-up Activities Employee Preparing review meeting (sometimes completing the form) Listening and commenting the feedback Making agreements for coming year Undertaking actions to improve performance Manager Completing forms Preparing meetings Conducting review meetings Summarising results Concluding marks Communicating with HR Monitoring improvement activities employee
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Performance Review Meeting
Agreed actions last appraisal meeting Competencies with examples of behaviour, conclusion and motivation Conclusion for Remuneration Training & Development activities Specific points to discuss Agreements about performance improvement Agenda for next year
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Topics to discuss Performance agreement
Abilities (Knowledge, Skills, Competencies) Motivation, Satisfaction, Drive, Ambition Opportunities in and beyond work environment New performance agreement
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Conclusions in the Performance Review
Rating on Performance Rating on Potential Use of Ratings
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Ratings on Performance 1
Outstanding performance in all aspects 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; performance of many aspects of the job is below an acceptable standard
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Comment When a manager would conclude with a rating “E, unacceptable”, in an appraisal, he didn’t do the right job himself: when people fail in their job, action should be taken at the time. That action could be demotion, transfer to another job or discharge.
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Ratings on Performance 2
Very Effective Exceeds all objectives and requirements. Achievements are notable and outstanding and are far beyond the expectations of the job Effective Achieves required objectives and standards of performance and meets the normal expectations of the job 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 on the whole meets the basic standards required, although a number of objectives are not met and there is clearly room for improvement in several definable areas
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Performance & Potential
Performance appraisal or performance assessment is used to evaluate someone’s performance against the requirements and standards of the job or position filled at the moment Key performance indicators (KPI’s), balance score cards (BSC) and performance interviews are useful and effective methods and tools to support performance assessment Potential assessment is an assessment against higher level standards and requirements; it is about the ability and power to grow to higher levels in the organisation Present Estimated Performance tool is an effective and efficient approach for potential management
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Performance and Potential
Questions: Is someone with superior performance promotable to a higher job ? What is the difference ?
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Ratings for Promotability
Is promotable to a higher job on the short term (within 1 to 2 years) B Is promotable to a higher job on the longer term (within 3 to 5 years) C Is not promotable to a higher job, if needed a transfer to another job could be considered
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Combining Performance and Promotability
Not Promotable Promotable on long term Promotable on short term Very effective Effective Developing Basic
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Combining Performance and Promotability
Not Promotable Promotable on long term Promotable on short term Very effective Reward them in special way Top stars (retention!) Super stars Effective The mainstay of the business Stars Developing Pay attention Future Stars ? Basic Extra attention needed (up or out) Question mark; investigate Question marks; investigate
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Strategic Review on Performance Management
Potential Objectives: Improving performance Compensate for contribution Measure : Present capabilities Objectives: Succession Planning Career Development Measure : Growth of individual
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Performance Performance related Competencies are: Commercial Awareness
Influencing and inspiring people Planning and Organising Analysing and Solving Problems Decision Making Delivering Results Directing and Supporting people Etc.
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Potential Potential related Competencies are: Ambition Energy
Abstract and Strategic thinking Creativity & Innovation Receptiveness to feedback Adapting and Leading Change Learning ability Coping with setbacks
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Link of Performance Management to other HR activities
Feedback on Recruitment and Selection Basis for remuneration and performance related pay Basis for training & Development Basis for staff- and succession planning Source of information for retention-policy
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Exercises Make a performance management model adapted to your organisation Define aims, objectives and methods Describe how it works: procedures Make forms for performance appraisal Practice conducting performance interviews (3 role plays; as manager, employee and observer) Identify how to use performance appraisal results of the whole organisation
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The Do’s and Don’ts for Performance Management
. Don’ts .
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