Appraising Auditor Performance: Strategies and Lessons Learned


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  • Sharpe Question 1 : Which of the following best describes you…? 1: I receive performance evaluations and I write them for others 2: I receive evaluations but do not write them for others 3: I write them for others but do not receive one 4: I neither receive one nor write one for others Sharpe Question 2 : An employee’s performance is based on individual efforts or collective efforts? 1: Completely based on individual efforts 9: Completely based on collective efforts The performance appraisal process usually concentrates on the individual’s performance, while work is always a function of the systems and processes in the organization.
  • Sharpe Question 3 : The appraisal time period in your organization is typically… Less than 4 months, 4 to 8 months, or more than 8 months? Appraisals tend to examine performance over a relatively long period of time: one year. They assume that performance is consistent and within the control of the performer. However, systems, processes, and environmental forces are in constant motion and are often beyond the individual’s awareness or control. Sharpe Question 4 : Do performance appraisals encourage you to work harder than you would otherwise…? 1= Yes, 2 = No The setting of specific goals or standards for performance valuation encourages performers to achieve these levels only and only up to a certain level. This limits both the focus of the performer and his or her potential achievements. Performance appraisals ultimately set up a win-lose situation, especially where ratings or raises must follow a prescribed distribution.
  • “ Do this or here’s what will happen to you.” Managers are creating a workplace in which people feel controlled, not an environment conducive to exploration, learning, and progress.
  • Sharpe Decision Question 5 : Which of the four appraisal systems do you think will be most effective… #1, #2, #3 or #4?
  • Sharpe Decision Question #6 : Which set of evaluation criteria do you think is the most relevant… #1 Skills-based, #2 Process-Based, or #3 Achievement-Based?
  • Sharpe Decision Question #7 : Which of the four evaluation scales do you think would be most effective…?
  • Question #8: The criteria my performance evaluation are based on: select a value from “1” for crystal clear to “5” for clear as mud? As reported by most studies, employees believe the criteria to be vague and subjective. The typical process is notable for its lack of specific measures or feedback that are known to the performer, meaningful to the organization, and relate to consequences that impact desired actions. Q.#9 : Between appraisals, I stay focused on goals set in the appraisal and my supervisor is monitoring my performance…? Select a value from “1” for Absolutely to “5” for Hardly Meaningful--For performance to appraisals to have any meaning to the performer, they need to have an impact on behavior. The most obvious concern is that even when goals are set, they are seldom monitored during the year, so that whether or not they are achieved has few consequences until the end of the performance period. Thus the appraisal process is basically not in operation during 3/4 of the year. Q.#10 : The goals in my performance appraisal are achievable: “1” for Absolutely, “5” for Hardly It is difficult to relate this factor to a process that basically uses general or after-the-fact performance parameters. Potentially, there are negative consequences if they are not achieved, and limited-to-no positive consequences if they are exceeded. Hence, the pressure to perform is more a negative reinforcement than an opportunity to provide positive reinforcement. The process is neither collaborative nor reinforcing. Q.#11 : I believe that performance appraisals in my organization are reliable: “1” for Absolutely, “5” for Hardly
  • (Civil Rights Act, Bito v Zia Company, Griggs v Duke Power, Wade v Miss.)
  • Susan: Please identify author of quote.
  • Business strategy will accentuate the creation of value for customers, stakeholders, and the community at large.
  • Employees will receive regular feedback on their performance throughout the year from the managers, colleagues, subordinates, and internal or external customers, as appropriate. Multisource feedback will be used to identify and address performance improvement or development needs
  • Difficult conversations are often a precursor to collaboration: they are a way to build trust. One way to make difficult conversations less difficult is to think about them in five stages. The first two stages should occur even before the conversation takes place. These are to, first, prepare for the conversation, and second, to imagine a resolution. Third, you want to invite the other person to have a dialogue, in which you’ll listen to their perspective and then explain yours. Finally, you should use this conversation to begin to collaborate on achieving a mutual resolution.
  • Don’t initiate a difficult conversation without doing sufficient preparation. Planning ahead of time allows you to imagine and practice for the “worst case scenario” Be open to the possibility that there are usually multiple realities: be curious about the other person’s version. They might know something that you don’t. Conflict can result when there are differences in 1) information (They believe this is a 3 stage vs. a 4 stage appraisal process); 2) observation (child focuses on trucks in parade while grandparents focus on floats); 3) interpretation (Annie Hall: Diane K. says we have sex all the time vs. Woody Allen says we rarely have it – both say 3x/week); or 4) conclusions You’ve got to have the correct attitude to have a fruitful conversation. Choose a positive mindset- you have a choice about your mindset.
  • It is important to have a positive mindset so that the other participant does not feel like they are on the losing end of a power struggle. Focusing on potential improvements or what can be achieved will help defuse the tension during the conversation.
  • It is important to remember that one objective of the conversation is to help improve the relationship and cooperation. Remaining open to the other person’s suggestions will go a long way toward achieving this objective.
  • When you initiate a difficult conversation, you want to explain your purpose and make sure that the other person feels comfortable enough to have a dialogue. Frame your points as things you’ve noticed from your perspective and acknowledge the other person’s feelings or observations before trying to resolve any issues. Example of different stories: I notice that we have different timelines for doing the dishes or I notice that our meetings are starting consistently 10 minutes late.
  • The biggest impediment to problem solving is blame; too much focus on figuring out who to blame can result in the problem being ignored Whenever you hear someone say something like “You’re lying!” You should automatically be curious and ask questions. Curiosity about the other person’s story will help you understand the situation more fully. Questions you should ask yourself include: I wonder what part of this is most important to them? What could bring us together on this issue?
  • Start with the points that you most want to get across and be clear about how you formed your conclusions; avoid extreme words like always or never; and remember to communicate to the other person that you are open-minded to their side of the story.
  • Be aware that the person may lob a few negative comments at this point. Make sure that you’ve acknowledged their concerns and invite them to help identify ways to resolve the situation. Let the other person know that you are open to meet again if an attempted resolution does not work. Or if you cannot work through an issue successfully during the first conversation, convey that you are open to meeting again until you are able to achieve a mutually acceptable resolution. You might say, “I’m really hopeful that we can talk through this issue.”
  • Appraising Auditor Performance: Strategies and Lessons Learned

    1. 1. Appraising Auditor Performance: Strategies and Lessons Learned Susan Cohen, City Auditor City of Seattle May 12, 2004
    2. 2. Agenda <ul><li>Reflecting on performance appraisal experiences </li></ul><ul><li>Lessons learned about performance appraisals </li></ul><ul><li>Dealing with performance appraisals and other difficult conversations </li></ul>
    3. 3. Credit <ul><li>Wilson, Thomas B. Innovative Reward Systems For the Changing Workplace McGraw-Hill, New York 1994 </li></ul>
    4. 4. Definition <ul><li>A PERFORMANCE APPRAISAL IS: </li></ul><ul><li>One of those special human encounters where the manager gets no sleep the night before, and the employee gets no sleep the night after. </li></ul><ul><li> --Thomas B. Wilson </li></ul>
    5. 5. Appraising vs. Managing Performance <ul><li>Appraising: </li></ul><ul><li>Limited (annual) feedback </li></ul><ul><li>Artificial rewards </li></ul><ul><li>Managing: </li></ul><ul><li>Continuous management review </li></ul><ul><li>Active and appropriate reinforcement </li></ul>
    6. 6. What Do We Want? <ul><li>Managers: Ability to recognize and reward superior performers. </li></ul><ul><li>Employees: Honest and timely feedback, specific development, and an opportunity to receive effective coaching. </li></ul><ul><li>Compensation Managers: To ensure that dollars are allocated according to performance levels. </li></ul><ul><li>Human Resource Executives: Ability to identify top performers, plan for their development and succession, and reward them adequately. </li></ul>
    7. 7. What the Experts Say <ul><li>Quality management gurus (Deming, Juran) argue that appraisals should be eliminated because they: </li></ul><ul><ul><li>Inaccurately portray individual performance as a major impact on results </li></ul></ul><ul><ul><li>Inadequately address system-based issues. </li></ul></ul>
    8. 8. Did You Know? <ul><li>At least two dozen studies over the last three decades conclusively documented that people who expect a reward for completing a task, or for doing that task successfully, simply do not perform as well as those who expect no reward at all. </li></ul><ul><li>--Harry Levinson </li></ul>
    9. 9. Rewards or Punishment? <ul><li>Pay is not a motivator </li></ul><ul><li>Rewards have a punitive effect because they are manipulative </li></ul><ul><li>Not receiving an expected reward is also indistinguishable from being punished. </li></ul><ul><li>Rewards rupture relationships </li></ul><ul><li>Rewards undermine interest because artificial incentive cannot match intrinsic motivation </li></ul>
    10. 10. Goals for Appraisal System #1 <ul><li>“Providing staff with information designed to maximize their individual potential and contributions to the agency </li></ul><ul><li>“Providing management with information needed to recognize and reward top performers </li></ul><ul><li>“Providing information and documentation needed to deal with poor performers” </li></ul>
    11. 11. Goals for Appraisal System #2 <ul><li>“Feedback to auditors </li></ul><ul><li>“How to improve skills and personal qualities </li></ul><ul><li>“Effective utilization of resources” </li></ul>
    12. 12. Goals for Appraisal System #3 <ul><li>“ Provide employees with feedback to improve performance </li></ul><ul><li>“ Provide basis for allocating pay increases/incentive awards </li></ul><ul><li>“ Focus training and development activities </li></ul><ul><li>“ Identify candidates for promotion </li></ul><ul><li>“ Create an opportunity for employees to receive recognition </li></ul><ul><li>“ Assure adequate documentation of performance that satisfies the requirements of the 1964 Civil Rights Act and EEO Commission guidelines </li></ul><ul><li>“ Improve communication between managers and employees </li></ul><ul><li>“ Establish performance goals and standards for the next performance period” </li></ul>
    13. 13. Goals for Appraisal System #4 <ul><li>“Reinforce collaboration, teamwork, and a focus on the priorities of the business” </li></ul>
    14. 14. Overarching Goal <ul><li>To create and promote a workforce that can achieve the organization’s mission to provide the most value to its stakeholders </li></ul>
    15. 15. Evaluation Criteria #1 <ul><li>Planning </li></ul><ul><li>Data Gathering and Documentation </li></ul><ul><li>Data Analysis </li></ul><ul><li>Written Communication </li></ul><ul><li>Oral Communication </li></ul><ul><li>Working Relations </li></ul><ul><li>Supervision </li></ul>
    16. 16. Evaluation Criteria #2 <ul><ul><ul><ul><ul><li>Achieving Results </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Maintaining Client and Customer Focus </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Developing People </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Thinking Critically </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Improving Professional Competence </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Collaborating with Others </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Presenting Information Orally and in Writing </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Facilitating and Implementing Change </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Representing the Organization </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Investing Resources </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Leading Others </li></ul></ul></ul></ul></ul>
    17. 17. Evaluation Criteria #3 <ul><ul><ul><ul><ul><li>Amount of Work </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Quality of Work </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Auditor Knowledge </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Problem-Solving Ability </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Communications Effectiveness </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Ability to Follow Instructions </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Planning Skills </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Relationships </li></ul></ul></ul></ul></ul>
    18. 18. Remember Myers-Briggs <ul><li>Anyone who supervises someone else should: </li></ul><ul><li>--Look carefully at the assumptions made about motivation. </li></ul><ul><li>--Assess the degree to which carrot-and-stick assumptions influence own attitudes. </li></ul><ul><li>--Harry Levinson </li></ul>
    19. 19. Various Scales <ul><li>Scale 1 </li></ul><ul><li>Meets Expectations </li></ul><ul><li>Exceeds Expectations </li></ul><ul><li>Role Model </li></ul><ul><li>Below Expectations </li></ul><ul><li>Scale 2 </li></ul><ul><li>Pass </li></ul><ul><li>Fail </li></ul><ul><li>Scale 3 </li></ul><ul><li>Unacceptable </li></ul><ul><li>Needs Improvements </li></ul><ul><li>Fully Successful </li></ul><ul><li>Exceeds Fully Successful </li></ul><ul><li>Outstanding </li></ul><ul><li>Scale 4 </li></ul><ul><li>No scale--qualitative information only </li></ul>
    20. 20. Typical vs. Ideal System <ul><li>Highly subjective process </li></ul><ul><li>Unilateral from boss’s perspective </li></ul><ul><li>Little focus on future capacity </li></ul><ul><li>Uncertain link to business success drivers </li></ul><ul><li>Explicitly defined process </li></ul><ul><li>Mutually understood </li></ul><ul><li>Strong development focus </li></ul><ul><li>Grounded in business success drivers </li></ul>
    21. 21. New Practices <ul><li>Pass/fail systems rather than individual performance ratings, or no ratings at all </li></ul><ul><li>Peer review systems rather than manager-driven systems </li></ul><ul><li>Using review periods as a means to counsel employees on career and promotional opportunities </li></ul><ul><li>Minimizing the relationship between performance and pay raises </li></ul>
    22. 22. Why Appraisal Systems Fail <ul><li>Managers lack sufficient information to judge performance accurately </li></ul><ul><li>The goals and standards are unclear and subjective </li></ul><ul><li>Employees become defensive </li></ul><ul><li>The process is not taken seriously </li></ul><ul><li>Managers do not prepare adequately </li></ul>
    23. 23. SMART <ul><ul><ul><li>Specific </li></ul></ul></ul><ul><ul><ul><li>Meaningful </li></ul></ul></ul><ul><ul><ul><li>Achievable </li></ul></ul></ul><ul><ul><ul><li>Reliable </li></ul></ul></ul><ul><ul><ul><li>Timely </li></ul></ul></ul>
    24. 24. Legal Considerations <ul><li>Personnel laws and court cases have established requirements for performance appraisals: </li></ul><ul><ul><li>--Performance measures must relate directly to the job </li></ul></ul><ul><ul><li>--Evaluations must be based solely on job criteria </li></ul></ul><ul><ul><li>--Results of evaluations must serve as the basis for making decisions (e.g., salary, training, promoting, layoffs, and terminations) </li></ul></ul><ul><ul><li>--Performance appraisals must be conducted at least once a year </li></ul></ul><ul><ul><ul><ul><li>(Civil Rights Act, Bito v Zia Company, Griggs v Duke Power, Wade v Miss.) </li></ul></ul></ul></ul>
    25. 25. Employee Considerations <ul><li>Clear sense of direction </li></ul><ul><li>Opportunity to participate in goal-setting </li></ul><ul><li>Timely, honest, and meaningful feedback </li></ul><ul><li>Immediate, meaningful, and sincere reinforcement of efforts </li></ul><ul><li>Coaching and assistance to improve job performance </li></ul><ul><li>Fair and respectful treatment </li></ul><ul><li>Opportunity to understand and influence decisions </li></ul>
    26. 26. Susan’s Favorite Quote <ul><li>If people do not participate in and “own” the solution to the problems or agree to the decision, implementation will be halfhearted at best, probably misunderstood, and more likely than not fail. </li></ul><ul><ul><ul><ul><ul><li>--Michael Doyle in forward to Kaner, Sam Facilitator’s Guide to Participatory Decision Making New Society Publishers, Gabriola Island, BC 1996 </li></ul></ul></ul></ul></ul>
    27. 27. <ul><li>Performance Management </li></ul><ul><li>Instead of </li></ul><ul><li>Performance Appraisals </li></ul>
    28. 28. Performance Management <ul><li>Communicate the organization’s mission, strategies, and performance goals </li></ul><ul><li>Establish performance measures to reflect both quantitative and qualitative elements. </li></ul><ul><li>Identify goals that balance short-term results with longer-term success indicators </li></ul><ul><li>Ensure that employees throughout the audit function understand the organization's goals </li></ul>
    29. 29. Performance Management (cont.) <ul><li>Foster employee involvement in goal-setting process </li></ul><ul><li>Provide training to managers and employees on giving and receiving feedback </li></ul><ul><li>Designate manager to serve as mentor and assist employees in using feedback for performance improvements </li></ul><ul><li>Provide training for employees to strengthen performance and advance career </li></ul>
    30. 30. Feedback <ul><li>Feedback should be related to meaningful consequence </li></ul><ul><li>Quantitative assessments valued more than narrative or subjective assessments </li></ul><ul><li>Public displays for group results and private meetings for individual feedback </li></ul><ul><li>Daily, weekly or biweekly feedback is valued more than annual feedback </li></ul><ul><li>Self-assessments have little value as an objective and meaningful source </li></ul>
    31. 31. Five Stages of Difficult Conversations <ul><li>Prepare </li></ul><ul><li>Imagine resolution </li></ul><ul><li>Initiate conversation </li></ul><ul><li>Explore their story, then yours </li></ul><ul><li>Collaborate on resolution </li></ul>
    32. 32. Stage 1: Prepare <ul><li>Consider your objectives and approach </li></ul><ul><li>Coach yourself to accept multiple outcomes </li></ul><ul><li>Focus on your purpose in initiating the conversation </li></ul><ul><li>Adopt a positive mindset (see next slide) </li></ul>
    33. 33. Choose a Positive Context <ul><li>When a conflict is framed in a negative context, the focus is on power, and will likely result in a winner and a loser. </li></ul><ul><li>“If a hammer is the only tool you have, everything looks like a nail.” </li></ul>
    34. 34. Stage 2: Imagine Resolution <ul><li>Relationship will improve as a result of conversation </li></ul><ul><li>Remain open-minded rather than advocate for a specific solution </li></ul><ul><li>Believe that a mutually acceptable solution can be achieved </li></ul>
    35. 35. Stage 3: Initiate Conversation <ul><li>Invite conversation and share your purpose </li></ul><ul><li>Key practice : describe the issue/problem as a difference in perspective </li></ul><ul><li>Avoid problem solving during initial stage of conversation </li></ul><ul><li>Acknowledge feelings that are frequently core issues, before attempting to solve stated problems </li></ul>
    36. 36. Stage 4: Explore Their Story-- Then Yours <ul><li>Start with their story </li></ul><ul><li>Don’t assume that you know their story </li></ul><ul><li>Don’t push back—Listening does not imply agreement </li></ul><ul><li>Express your views and feelings after their story is finished </li></ul>
    37. 37. Your Story <ul><li>Start with the most important points </li></ul><ul><li>State what you mean clearly to avoid assumptions </li></ul><ul><li>Share how you formed conclusions </li></ul><ul><li>Avoid words like “never” or “always” or “fault” </li></ul><ul><li>Present your story as “your truth” not “the truth” </li></ul>
    38. 38. Stage 5: Collaborate on Resolution <ul><li>Invite the other person to help identify solutions </li></ul><ul><li>Invite the other person to come back if attempted resolution is not successful </li></ul><ul><li>Remain hopeful that mutually acceptable solution is possible </li></ul>