Board of Directors Meeting – 6 April 2016

Agenda item 29/16

Title Appraisal Review Proposal Version 1.0

Sponsoring Director Mary Foulkes, Director of Organisational Development and Human Resources

Author Emma Nicholls, Head of Learning and OD

Purpose This proposal outlines recommended improvements to the Trust’s Appraisal form and process

Executive Summary A good appraisal creates an increased sense of personal value, improved working relationships, clear alignment of individual objectives with corporate priorities and a culture of continuous improvement. There is strong evidence that the quality of the appraisal has a direct link to employee engagement, which in turn has a direct impact on the quality of patient care. The proposed improvement actions include the introduction of:

1. A much shorter and simpler form 2. The introduction of a 5 scale rating system 3. Improved governance around the reporting and moderation process

Date Reviewed by the Executive 24 March 2016

Related Trust Objective Corporate Objective 2 – Staff – feel proud to work here and keep making a difference. Risk 1 & 2.

Legal implications / regulatory requirements

This report includes measures which affect our CQC compliance, outcome standards:-12 - Requirement relating to workers, 13 – Staffing 14 - Supporting staff

Quality impact assessment

The report provides assurance on quality performance as there is a correlation between staff, staff satisfaction and the quality of patient care.

Equality impact assessment

Monitoring recruitment levels will enable us to

understand the impact of any permanent staffing

deficit on care

Recommendations:

Approve Assure Note x

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Background

Quality appraisals are an important driver of high staff engagement; there is now an overwhelming body of evidence to show that engaged staff deliver better health care. Trusts with more engaged staff tend to have lower levels of patient mortality, make better use of resources, and have stronger financial performance and higher patient satisfaction.

Research shows that the quality of the appraisal is a key factor in predicting employee engagement.1 Figure 1: Engagement and appraisal type

For all three dimensions of engagement (as well as overall engagement), those employees who had received a well-structured appraisal had far higher engagement than those who had not. Most interestingly, engagement was generally lower among those staff who had received a poor quality appraisal than those who had received no appraisal at all. This suggests that an appraisal meeting which is not well-structured can be counter-productive, leaving the employee feeling less motivated about his/her work and organisation. The one exception is for involvement, which is slightly higher among people receiving a poor quality appraisal than those who received no appraisal at all – suggesting that any appraisal meeting is more likely to give some opportunity for communication and suggestions about improvements to the job. Quality appraisals should provide staff with:

• A clear understanding of their role and the part they play in their team and the Trust

• An agreed set of work objectives that are SMART (Specific, Measureable, Achievable,

1 Employee engagement and NHS performance (Michael A West - Lancaster University, Jeremy F Dawson - University of

Sheffield) published by the Kingsfund 2012

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Relevant and Time Bound)

• A plan for acquiring and applying the knowledge and skills they need to do their job well and achieve the Trust’s linked objectives

• A way to identify the support and development they need to do their role well

The Trust’s current appraisal process has been in place since April 2013. Feedback from the 2015

NHS Staff Survey highlighted that there is a need to improve the current appraisal process2.

So whilst 87% of staff (who completed the survey) report that they are having an appraisal, they

are also reporting that the quality is not good. This is common amongst our Essex Acute Trust

peers and SUHT has a similar score to other Acute Trusts in the county:

2 2015 National NHS staff survey – Brief Summary of results from SUHFT

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Table 2 comparison of NHS Staff Survey results:

Key Finding 11. Percentage of staff appraised in last 12 months

Key Finding 12. Quality of appraisals

SUHT 87% 3.01

Basildon and Thurrock 89% 3.05

Mid- Essex 82% 2.92

Colchester 79% 3.08

Princess Alexandra 68% 3.00

The highest score for KF11 was 95% for Cambridge University Hospitals NHS Foundation Trust,

and the highest score for KF12 was 3.39 (West Middlesex University Hospital NHS Trust) and the

average for all Acute Trusts was 3.06.

In addition feedback from managers and staff through focus groups has highlighted a need to

change the current process and form. (Please see Appendix 1 for Focus groups feedback)

The key outcomes and of the appraisal review process have been identified as follows:

1. A shorter and simpler appraisal form (no more than 5 pages)

2. Inclusion of, and a straightforward review of the new Trust Values

3. Improved governance around reporting and completion

4. Clear link to Stat Man training

5. A simple to use development plan and career planning template/CPD

6. A review of the current performance ratings

7. The Moderation process is properly governed

8. No change to increment process but much better governance

9. Integration into Probation Policy re setting objectives

10. Implementation of an on line reporting system

Recommendations

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The key recommendations have been identified as follows:

A shorter and simpler appraisal form is introduced to replace the existing form. Please refer to Appendix 2 Southend University Hospital Foundation Trust Appraisal Form (separate attachment)

The Trust’s current appraisal form is 15 pages in length and is perceived as being too long. It is recommended that a shorter 5 page form is introduced. The new form will include:

Clear signposts to the Trust’s Vision, Strategic goals and Values and an opportunity for Directorates to insert their own objectives. This provides the opportunity for managers to reinforce our Vision, Strategic goals and Values and ensure that every member of staff understands how they can contribute to them

The opportunity to review the individual’s objectives from the previous year, enabling the member of staff to reflect and review on what they have achieved and also for the manager to add comments, evidence, observations and feedback

The opportunity to review any learning and development activities undertaken

A review of how the individual has demonstrated the Trust Values over the Year. This review is now on one page

A prompt to check and review the level of the individual’s Stat Man Training compliance and agree what action is to be taken (if any). This at the very least will prompt the manager to have the discussion and may encourage the individual to discuss reasons why they have not been able to undertake the required Stat Man training

A summarised review page of the previous year (both performance and behaviours against the Values) and ratings

The opportunity to discuss longer term career aspirations and goals

The setting of new targets and objectives for the forthcoming year and the identification of development needs to support the successful achievement of the objectives

It is recommended that the new form is used for all staff (excluding Doctors who fall under the Medical Appraisal and Revalidation process).

Improved governance around reporting and completion

The simpler and shorter form should ensure that managers and staff feel the process is easier to implement. Managers will still be required to send completed Appraisal forms to HR, who log receipt and ensure that increments are actioned if applicable.

New improvements to the process will included a monthly 5% audit of the quality of all forms received. This audit will then inform action planning such as further training requirements and feedback to managers.

It is also recommended that the completion level of appraisals is on the agenda of every Directorate’s monthly performance review. The current target completion rate is 85%, and ytd our level is only 74% with quite a wide variance across Directorates.

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The introduction of a 5 point performance ratings scale.

Moving from a 4 point rating scale to a 5 point rating scale would create a broader distribution of scores, providing a better performance management tool for managers, which will inform talent development, career progression and succession planning. This will enable a higher degree of differentiation between ratings and the opportunity to improve staff engagement.

The current structure for the rating scale, descriptions and associated incremental pay is as follows:

Current Rating

Current Description Current Increment

1 Below expectations for the role None

2 Meets most expectations of the role Single

3 Meets all requirements of the role Single

4 Exceeds all requirements of the role Double

The recommended structure for the rating scale, descriptions and associated incremental pay is as follows:

Proposed Rating

Proposed Description Proposed Increment

1 Fails to meet performance expectations None

2 Needs improvement Single*

3 Meets performance expectations Single

4 Exceeds performance expectations Single

5 Far exceeds performance expectations Double

*It is proposed that a rating of 2 retains incremental pay.

It is expected that the ratings for the Trust reflects a standard distribution curve. Using a 5 scale rating allows better focus on the tails of the curve i.e. to work on improvement plans for those who are failing to meet performance expectations and need improvement and looking for ways to continue to motivate and retain those who go above and beyond expectations. To help managers to understand each description, Appendix 2 will be included within the manager’s guide when the new form is launched.

Feedback from the focus groups about rating suggests that managers and staff would prefer 5 ratings (see appendix 1).

The Moderation process must be more robust and properly governed

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Rewarding staff in line with employee performance ratings can often present a challenge for many organisations, however having a consistent process of moderating performance ratings in place is essential to ensure fairness and accuracy of performance appraisal ratings.

To enable staff to see it as a fair process and something for them to work towards there are a number of factors that need to be explored.

Transparency and Fairness

Staff often say they don’t believe that a double increment is available due to differing applications of the rules within directorates

No guidelines in place therefore different processes apply within Directorates

Lack of confidence of managers to allocate 1 or 4 due to lack of understanding of where or when moderations boards take place

No transparent review or track of overall spread of performance ratings managed within the directorate – only the existing ratings of 4 and 1 are reviewed across the Directorate, and mostly managers opt for a large number of ratings within band 3

In simple terms a true moderation is the process of comparing the performance ratings obtained across the organisation with the goal of ensuring consistency of evaluation and rating. Until the system is automated and because appraisals are reported on by employee start date and not on a standard annual cycle, evaluation of ratings across the board is not possible so this will be pursued as part of the system requirement in a later phase of the Appraisal review.

Currently there are a number of levels within the performance management process where moderation exists

Review of feedback by manager of performance of individual with a subsequent rating.

2nd line manager sign off of an individual appraisal

Referral into the moderation board to review evidence of substantiating exceeding (currently 4) and underperformance levels (currently 1)

There is currently little Governance to support the evidence of any of these stages, and this means that when ratings of 1and 4 forms are sent through to HR, there can be a delay due to the administration team sending emails back and forth to the managers to confirm if moderation has taken place. Therefore the following improvement actions are recommended:

The responsibility within each Directorate is to review ratings which are proposed as 5, through a moderation process. The HRBP’S will ensure that the process is followed

The moderation process is built into the existing monthly performance meetings held within

each Directorate (rather than having a separate meeting). It is a standard agenda item

The final approval of a rating of 5 will be made by the AD, and HON with guidance from the HRBP

The ratings proposal to be presented by the manager of the individual along with evidence to substantiate the rating to the Directorate senior team. Guidance notes will be produced

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to support managers for this element

A moderation sign off form will be completed for all moderations. The form will be sent together with the appraisal form to HR

The Director of OD & HR will complete a twice yearly audit of the moderation process, and the overall compliance level will be reported to the OD & ED Board

Implementation of an online reporting system

There has been some initial work in investigating options around the use of an online Performance

management system. The iLearn system can be used for Appraisals and some NHS Acute Trusts

are currently using the functionality. ESR/OLM has also has functionality, however ESR Managers

Self Service and Employee Self Service would be required to be active to enable it to be used.

Further research will be undertaken to identify the best approach; the resulting recommendation

will have a high dependency on the decision about the Trust’s choice of Learning System.

Milestones and actions

Milestones By when?

Research phase including focus groups End of February 2016 COMPLETE

Approach agreed in principle by Executive Team 10th March 2016

COMPLETE

Approach discussed with CMT 22nd March 2016

Approach agreed at Trust Board 6th April 2016

Launch new process From 1st May 2016

Incorporate new Nurse Revalidation appendix when available

TBC

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Appendix 1 – Focus Group Feedback

A number of sessions took place obtaining feedback on the existing process and form.

Feedback about the existing form:

What they would change: Form too long, very wordy, rating of behaviours on multiple pages

with the line rating of 1 - 4 too complex. The form is not Speciality specific

What they found useful: staff completing the first sections and sending it through to the

manager beforehand, the opportunity the appraisal gave to have a 2 way conversation

Feedback on the draft form layout:

It is more flexible to use, a lot shorter, more succinct for example “the question ‘what did

you do and what did you learn’ helps the conversation to focus on reflecting back on what

you did well last year”

The values page is more streamlined, and one person said “it is easy to see how the values

relate to each other than how they were previously shown”

The landscape format is easy to read, the sections were clearer and still patient focused,

although this can be difficult if the persons role is not patient facing

It was felt that the new format which includes the Corporate and Directorate objectives

would enable an effective conversation with the individual and focus on what needs to be

achieved. “I would like the option to put our team objectives at the top as I this would be

more relevant to my staff”

They supported the way Stat/Man was included and one person said “it would make staff

more accountable for completing their training”

Other comments

“We should be encouraging supervision meetings throughout the year to discuss objectives

rather than only once a year”

“I think regular meetings are important because when people are busy, great achievements

pass us by and are not recognised”

The moderation boards are not consistent; some operate a process where the manager

presents others pass the information up to a more senior manager to present which can be

seen as unfair. If we continue with moderation boards it was suggested we introduce a

template for managers to follow that explains what excelling really means

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Feedback about the ratings:

‘Definitely prefer to have 5 - there was previously a big gap between 3/4 that I don't think

really gave adequate recognition for those exceeding requirements of role’

‘I like the reality that you may exceed some but not all ‘

‘Definitely some staff go beyond their requirements and I feel this should be acknowledged

in appraisal’

‘I chatted to my colleagues in Rehab and we feel the 5 rating would work with transitions

through bands but only if that is available in the job you do’

‘I like the new form and certainly think that it’s an improvement on the existing one but I

think the scoring needs to be more granular and range from 1 – 5 rather than 1 – 4’

‘The problem that we encounter with appraisal scoring is one of perception’

‘Although many staff will have “average” performance there is not an average score

available when the range is only between 1 – 4. A score of 2 is below average while a

score of 3 is above average’

‘We find that this creates a problem where managers will tend to give their “average”

performing staff a score of 3 and their “above average staff” a score of 4. However, any

“outstanding staff” they might have (i.e. those that merit a double increment) also achieve a

4 and hence the point about insufficient granularity’

‘Admittedly, the problem can be resolved if managers give their “average” performing staff a

score of 2. However, this shifts the problem to the other end of the scale where average

performance is very close to extremely unsatisfactory performance’

‘I would prefer a rating of 1 – 5 with average performance being scored as a 3. This is a

true average where there are two higher scores and two lower scores. Therefore, better

than average performance can be rewarded with a 4 while a score of 5 can be reserved for

the outstanding achievements’

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Appendix 2 – Suggested 1 - 5 rating definitions

Performance Rating Scale – Definitions

Southend University Hospital NHS Foundation Trust

Performance Assessment Guide

For each competency area, the manager will provide a performance rating. There is also an

“overall rating” that represents the employee’s performance and results in the areas of

competencies objectives and values. Below are definitions for managers rating of

employee’s performance, the list is not exhaustive and should be used as guidance when

assessing each objective and the overall ratings.

Rating of 5 - Far Exceeds Performance Expectations

The employee considerably and consistently surpasses performance

expectations and achieves beyond the regular objectives in all areas throughout

the performance cycle

Performance is well above expectations in terms of completeness, timeliness,

and independence; and the employee demonstrates mastery of the skills and

tasks involved

The employee regularly makes significant contributions to the

Department’s/Trust’s success well beyond the employee’s objectives through

unique and exceptional application of their knowledge

Other Trust employees commonly seek out the employee for assistance. The

employee is a model for excellence, with a strong potential for advancement

The employee performs independently in planning, anticipating problems, and

taking appropriate action

Shows a grasp of the “big picture” and thinks beyond the details of the job or

project at hand

The employee requires very minimal supervision or follow-up

Rating of 4 - Exceeds Performance Expectations

The employee clearly and consistently surpasses performance expectations and

goals, and demonstrates unique understanding of work well beyond job

requirements

Work is done independently and completed on schedule with a high degree of

accuracy and independence

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Performance is what can be expected of a fully qualified and experienced person

in this position

Errors in judgment are rare and seldom repeated

Performance is characterised by high achievement; the employee shows initiative

The employee requires minimal supervision or follow-up

Rating of 3 - Meets Performance Expectations

The employee meets job performance standards in all or most areas

The employee is reliable in attaining expected results, and is timely and efficient

Initiative and outputs are generally good, and the employee is capable and

knowledgeable in most aspects of his or her work

The employee requires a reasonable amount of supervision

Rating of 2 - Needs improvement

The employee is not satisfactorily completing the majority of assigned duties and

needs to demonstrate improvement toward meeting performance standards

Work results are inconsistent

Continued improvement in performance is required

The employee requires close supervision

A written performance improvement plan should be in place

Rating of 1 - Fails to Meet Performance Expectations

The employee is not meeting expected standards or goals set for the position

The employee does not demonstrate knowledge or ability to perform the majority

of assigned duties

The employee must show significant improvement toward satisfactory

achievement of performance standards in order to continue Trust’s employment

The employee requires excessive supervision, direction and follow-up

The manager should contact their HRBP prior to assigning an employee fails to Meet

Performance Expectations rating. Immediate improvement is essential, and the

employee should be on a documented performance capability improvement plan.