1. 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

2. 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.

3. 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?

4. THE PERFORMANCE MANAGEMENT CYCLE DEVELOPMENT AGREEMENT
PERFORMANCE AND
DEVELOPMENT AGREEMENT
Performance review
Managing performance
throughout the year

5. 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

6. 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.

7. 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.

8. 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’.

9. 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

10. 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).

11. 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

12. 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.

13. 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?

14. 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.

15. 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.

16. PERFORMANCE REVIEWS: KEY FEATURES
forward looking – not a post-mortem
exchange of views (dialogue)
measurement
feedback
positive reinforcement
constructive
leads to an agreement.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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.

22. concentrate on the speaker respond quickly
LISTENING
concentrate on the speaker
respond quickly
ask questions to clarify meaning
comment as necessary to show understanding.

23. 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.

24. 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.

25. 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.

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

27. 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).

28. 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

29. PERFORMANCE MANAGEMENT AT HALIFAX

30. 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.

31. 360-DEGREE FEEDBACK MODEL
Manager
Colleagues
Individual
Customers/clients
Direct reports

32. 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.

33. EXAMPLE OF 360-DEGREE PROFILE
Gives useful feedback
Establishes good working relationships
Open to new ideas
Values other’s opinions
Recognizes achievements
Scale

34. 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

35. 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.

36. 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?

37. WHAT’S IT FOR?
Essential to be clear about its purpose, eg developmental, enhancing a performance culture, and to communicate that purpose to everyone.

38. 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.

39. 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).

40. 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.

41. Your Experience As employee Positive Negative As manager
Main Topics for Improvement ?

42. Performance Management Practice

43. Topics to discuss What is Performance Management What are methods
What are procedures
The use of Performance Management

44. What is Performance ? Performance = f ( A, M, O)
A = Abilities (Knowledge, Skills, Competencies)
M = Motivation (Personality, Motivation, Drive, Interest)
O = Opportunities

45. 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

46. 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’

47. 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

48. 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)

49. Performance Management Process
Rewarding Performance
Evaluating Performance
Developing Performance
Monitoring & Feedback
Planning & Goal
Setting
Managing Performance

50. 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

51. 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

52. Topics to discuss Performance agreement
Abilities (Knowledge, Skills, Competencies)
Motivation, Satisfaction, Drive, Ambition
Opportunities in and beyond work environment
New performance agreement

53. Conclusions in the Performance Review
Rating on Performance
Rating on Potential
Use of Ratings

54. 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

55. 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.

56. 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

57. 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

58. Performance and Potential
Questions:
Is someone with superior performance promotable to a higher job ?
What is the difference ?

59. 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

60. Combining Performance and Promotability
Not Promotable
Promotable on long term
Promotable on short term
Very effective
Effective
Developing
Basic

61. 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

62. Strategic Review on Performance Management
Potential
Objectives:
Improving performance
Compensate for contribution
Measure : Present capabilities
Objectives:
Succession Planning
Career Development
Measure : Growth of individual

63. 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.

64. 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

65. 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

66. 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

67. The Do’s and Don’ts for Performance Management.
Don’ts .