Performance Management Cycle

Performance Planning

Staff and the Organisation

Performance and Development Reviewing

Enabling staff to deliver

Taking stock of achievements, diagnostics

Setting Objectives, defining what is needed

Action

Reset objectivesMake changes

The Performance Cycle» Major Areas of Responsibility» Individual Priorities» Knowledge, Skills and Behaviors» Development plan» Reaching agreement» End-of-cycle

review» Continuous

progress and development » Ongoing

Feedback» Coaching» Interim reviews

Alignment Model

Your

Organizational Priorities

Your Major Areas of Responsibility and Individual Priorities

Mission

Values

Departmental Priorities

Knowledge, Skills and Behaviors

Performance Development Process

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“What” “How”

The Performance Cycle» 2001: December 21» 2002: June-July

» 2002: May» 2002: April-

May

» 2002: March» 2002:

December-January

What Is “Good Performance”?

• More than just activities, effort, good intentions, or results• Working hard and staying busy are not necessarily

high performance

• Attending training sessions and studying hard does not necessarily lead to good performance

• Strong commitment may not lead to good performance

• Even accomplishing some goals may not be high performance

Performance Management –

Broader Than Performance Appraisal

Begins with a look at goals & strategies of the organization

Organizational Alignment

All efforts must be aligned with overall goals and strategies of the

organization.

…a key to Performance Management

Performance Management a Cascading Process

• Mission, goals, and strategies should be defined, and clearly understood by everyone

• How do all tasks contribute to overall plans for the organization?

Annual Plans Should Create Performance Standards for

Each Department• These should translate into performance

goals for each worker• Quantity• Quality• Time• Cost

What Are the Three Steps in Performance Management?

Defining PerformanceFacilitating Performance

Encouraging Performance

Performance Appraisal

Developmental and Administrative Decision Processes

Performance Appraisal continues to be one of the most

criticized HR functions in organizations

Performance Appraisal

• We all measure our subordinates’ performance whether we do it formally or informally

• Very important to document what we evaluate

• Also necessary to show a clear link between what we evaluate and job requirements

What Purposes Can P.A. Serve in an Organization?

Any potential conflicts here? Explain.

How Frequently Should Performance Appraisal Be

Done?Why?

Performance Appraisal - a Continuing Process

• Is not a once-a-year or once-a-quarter experience• Effective appraisal occurs frequently• There should be no surprises when an employee is

given his or her formal appraisal interview• Essential for coaching & positive

motivation

The Main PointBe sure that what is measured is documented & can be shown to

match job expectations

A Key to All of This:

Supervisors must have the support &

encouragement of higher management to make all

this work

Behavior - Oriented Systems

• Ranking Methods• Strait Ranking• High-Low (Alternate Ranking)• Paired Comparison

• Forced Distribution (similar to ranking)

• Graphic Rating Scales

Ranking Method

• Straight ranking

• Alternation ranking

• Paired comparison

Explain Each of the Ranking Methods

Preference Among Them?

Attractions? Limitations?

Forced Distribution

• Design?

• Purpose?

• Do you recommend or not recommend? • Why or why not?

Graphic Rating Scale

Single Most Popular Method of Appraisal

Graphic Rating Scale

• Explain how it works• Give an example

• Potential strengths?

• Potential weaknesses?

Critical Incidents

• Based on Observation of Behaviors• Positive• Negative

• Written Notation of Behaviors is Made & Placed in Each Employee’s File

Critical Incidents

• Each Observation is Discussed With the Employee at the Time of Occurrence

• A Portfolio of Observed Events is Collected Over Time

Any Problems With Critical Incident Method for Appraisal?

Behaviorally Anchored Rating Scales (BARS)

• A form of graphic rating scale

• How is different from traditional rating scale?

Behaviorally Anchored Rating Scales (BARS)

Attractions?

Limitations?

Results (Outcome) Based Appraisal

• Management by Objectives (MBO) in Some Form is Commonly Used

• Focuses on Measurable Results of Mutually Agreed-Upon Goals for a Work Cycle

MBO

• Steps in development and usage?

• Potential strengths and weaknesses?

Factors to Consider in Choice of a P. A. System

• Cost

• Usefulness in employee development

• Usefulness in administrative decisions

• Validity

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?

Who Appraises?

• Supervisor

• Peers

• Subordinates

• Self Appraisal

• Customers

Usefulness of Each?

Explain

360 Degree Appraisal

Best Known Book on the Subject: Edwards & Ewen,

360 (degree) Feedback, Amacom, 1996.

Three Types of Appraisal Interviews

• Tell & Sell

• Tell & Listen

• Problem Solving

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.

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?

Managing performance for …

Accountability

Performance target setting and outcome/results review

AND / OR

Managing performance for …

Employee

Development

Competence assessment and development

Stages of performance management

Plan

Monitor

Develop

ReviewReward

Stage 1 – Individual Performance Planning

Stage 1 – Planning

•Work goals

•Competencies

•Learning

Performance 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.

Plan

Performance planning

• How 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?

Performance Planning

• Performance results – the what– Performance outcomes or standards – from job

description– Performance objectives for the next time period

• Performance behavior – the how– Competencies, performance factors, or

behavior expectations

• Development objectives

Peter Drucker

Management 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.

• 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.

MBO Principles

Cascading of organizational goals and objectives

Specific objectives for each member

Participative decision making

Explicit time period

Performance evaluation and feedback

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?

Hierarchy of objectives

Vision Mission Goals Objectives Policies Procedures

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).

SMART

Management by Objectives introduced theSMART method for checking the validity ofObjectives,

'SMART':• Specific• Measurable• Achievable• Realistic, and

• Time-related.

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.

Stage 2/3 – Monitor and Develop

•Feedback

•Coach

•Adjust goals

Monitor

Develop

Daily performance management

• Feedback and coaching – informal

• Monitoring and tracking performance against standards and progress toward goals.

• Quarterly performance planning and performance discussions

• Development through coaching, training, challenging or visible assignments, improving work processes

What performance will be measured?

• Behaviors – how the work is done– Performance factors / competencies– Required behaviors – Behaviors supporting desired organizational

culture

• Results – what is achieved – Performance outcomes– Performance compared to job standards– Performance goals and/or objectives

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. Stage 4 – Review

•At least annually

•Discuss

•Document

Review

Performance Review

• Summary of performance over a period of time

• Evaluate performance results and behaviors

• Conducted 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.

If a rating scheme will be used

• Number of levels: three, four, five, or six• Rating labels

– Numerical: e. g. 1, 2, 3, 4, 5– Behavioral frequency: e. g. always, usually,

frequently, sometimes, rarely– Evaluation: e. g. distinguished, superior,

competent, fair, marginal– Performance against a standard: e. g. exceeds,

meets, does not meet

Who will assess performance?

• Immediate supervisor only

• In addition to the immediate supervisor– Employee (self)

– Peers and coworkers

– Internal and external customers

– Subordinates

Choices include:

Approaches to designing an appraisal form

• Trait based

• Behavior based– Competencies (or performance factors)– Behaviors

• Results based– Performance outcomes– Objectives

What will be on the form?

• Identifying information

• Instructions

• Performance outcomes and/or results achieved (or not achieved) on objectives

• Performance factors / competencies / work behaviors

• Employee signature and approvals

Other information

• Employee comments

• Summary of one to three major achievements

• Strengths / areas for development

• Overall rating

• Plan for development (if not elsewhere)

• Performance plan for next period (if not elsewhere)

Stage 5 – Reward

Good 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!!

Stage 5 – Reward

•Monetary

•Non-monetary

•Recognition

Reward

Rewards, recognition, and compensation

• Recognizing employees for performance– Non-monetary rewards

– Informal and ongoing acknowledgements of good work

• Compensation– Merit increases?

– Pay to market?

– Increases added to base pay or lump sum?

Separate conversation about pay from conversation about performance!!!!!

What support systems need to be in place?

• Senior management support• Management accountability• Communication about the process• Training• Process for new employees• Process for dealing with poor performance• Monitoring and evaluating the process (HR)• Appeals process (HR)

Communication

• Timeframe for the performance management cycle

• Instructions for the supervisor

• Instructions for the employee

• Tie to other systems• Support available

Sample schedule for the performance management cycle

• Complete operating plan• Update quarterly performance plan form with

major agency objectives• Conduct training for supervisors (and employees)• Communication before, during, after• Timeframe for completion of appraisal• Timeframes for quarterly performance plans• Interface with compensation schedule

Dissatisfaction with Appraisals

• 95% of companies use appraisals , majority

are dissatisfied with them (Wall Street Journal)

• 90% of appraisal systems unsuccessful

(SHRM, 1995, DDI, 1993)

• “I’d rather kick bricks with my bare feet

than do appraisals” (manager at Digital Corp)

• Many companies abolished ratings:

Pratt & Whitney Blockbuster IBM Albany Intern

Performance AppraisalPurpose

• Control Behavior • Set Standard

• Measure Performance

• Compare Performance Against Standard

• If Discrepancy Exist, Take Corrective Action

• Used to Provide Feedback• Used as Basis of Reward & Punishment Systems• Used for System Improvement

© Dr. Dianna Stone

Performance Management

Reward or Take Corrective Action

Reward or TakeCorrective Action

Set Standards

Provide FeedbackMeasure

Performance

© Dr. Dianna Stone

Conflicts in Performance AppraisalConflicting Goals of Appraisal Create Problems

Organization Seeks Information To

Improve Systems

Individual SeeksValid Performance

Feedback

Individual Seeks Extrinsic Rewards

Organization Seeks Information On Which

To Base Rewards

© Dr. Dianna Stone

Requirements of Effective Performance Management

• Relevant to job performance

• Distinguishes Effective & Ineffective Performance

• Fair & Acceptable

© Dr. Dianna Stone

Performance Standards

• Managers assume standards are clear

• Communicate - What is to be done?

• How well should it be done?

© Dr. Dianna Stone

Performance Measures

• Objective Measures - Hard Criteria$ Sales Personnel Data Tardiness

Units Produced Absence Rate

Error Rate Turnover

• Weaknesses– Performance Modified by Situation - Opportunity Bias– System Responsible for 96% of Variance - Person 4%

(Deming)– Objective measures do not apply to all jobs

© Dr. Dianna Stone

Performance Measures

• Subjective Measures - Performance Measures• Who Rates? Supervisors, Peers, Subordinates, Self• Errors & Biases

• Halo Error

• Central Tendency

• Leniency (Positive & Negative)

Goal is to Accurately Appraise Performance

© Dr. Dianna Stone

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 job

• Forced Distribution 10% 20% 40% 20% 10%

Poor Below Average Above Excellent Average Average

© Dr. Dianna Stone

Methods• Advantages (Forced Distribution) : Decreases Central

Tendency & Leniency Errors• Disadvantages (Forced Distribution): May not be

accurate reflection of performance• Graphic Rating Scale - Most Widely Use

Quality (1) (2) (3) (4) (5)Poor Below Average Above Excellent

Average Average

• Behaviorally Anchored Rating Scale - Based on critical incidents, Behaviors are anchors

© Dr. Dianna Stone

Methods

• Behaviorally Anchored Rating Scales

Police Officer: Job Knowledge

High (7, 8, 9) Follows correct procedures for evidence preservation

Average (4, 5, 6) Seldom has to ask other about points of law

Low (1, 2, 3) Misinforms the public about laws

© Dr. Dianna Stone

Progressive Disciplinary Systems

• Steps

1) Counsel Employee about Performance Problem

2) Verbal Reprimand & Warning

3) Written Reprimand & Warning

4) Disciplinary Layoff (Short-term)

5) Discharge

© Dr. Dianna Stone

Progressive Disciplinary Systems

• Reasons to Avoid Discharge

• Unfair Labor Practice (Legal & Contractual Restrictions)

• Company Payments Toward Unemployment & Severance Pay

• Strikes

• Court Action - Back Pay Awards

• Investment in Human Resources

© Dr. Dianna Stone

Problems with Appraisals

• Survey by Ernst & Young showed that 38% of employees say they are rated unfairly or not at all

• Deming argues that Performance Appraisal is “A Deadly Disease in Organizations”

• Disregards existence of system

• Erroneously attributes variation in performance to individuals (85-15 rule)

• Undermine teamwork, improvement

• Focuses on short-term, end product

© Dr. Dianna Stone

Appraisal Interviews

• Give Feedback daily

• Encourage participation

• Judge performance not personality

• Be specific - provide critical incidents

• Set mutual goals

© Dr. Dianna Stone