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 objectives Make 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 Ongoing Feedback

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 UNIT OR DEPARTMENT HARVARD COLLEGE LIBRARY PERSONAL “ What” “ How”

The Performance Cycle 2001: December 21 2002: June-July 2002: May 2002: April-May 2002: March 2002: December-January Ongoing Feedback

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

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?

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

These should translate into performance goals for each worker

Quantity

Quality

Time

Cost

What Are the Three Steps in Performance Management? Defining Performance Facilitating 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

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

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 Point Be 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 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

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?

Design?

Purpose?

Do you recommend or not recommend?

Why or why not?

Graphic Rating Scale Single Most Popular Method of Appraisal

Single Most Popular Method of Appraisal

Graphic Rating Scale Explain how it works Give an example Potential strengths? Potential weaknesses?

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

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

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?

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

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?

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

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?

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

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

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.

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?

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

Accountability

Performance target setting and outcome/results review

AND / OR

Managing performance for … Employee Development Competence assessment and development

Employee

Development

Competence assessment and development

Stages of performance management Plan Monitor Develop Review Reward

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

Stage 1 – Planning

Work goals

Competencies

Learning

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?

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

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.

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 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

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?

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

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).

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 the SMART method for checking the validity of Objectives, 'SMART': Specific Measurable Achievable Realistic, and Time-related .

Management by Objectives introduced the

SMART method for checking the validity of

Objectives, '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

Stage 2/3 – Monitor and Develop

Feedback

Coach

Adjust goals

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

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

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

Stage 4 – Review

At least annually

Discuss

Document

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.

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

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:

Immediate supervisor only

In addition to the immediate supervisor

Employee (self)

Peers and coworkers

Internal and external customers

Subordinates

Approaches to designing an appraisal form Trait based Behavior based Competencies (or performance factors) Behaviors Results based Performance outcomes Objectives

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

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)

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

Stage 5 – Reward

Monetary

Non-monetary

Recognition

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!!!!!

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?

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)

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

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

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

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 Appraisal Purpose 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

Purpose

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

Performance Management Reward or Take Corrective Action Reward or Take Corrective Action Set Standards Provide Feedback Measure Performance © Dr. Dianna Stone

Conflicts in Performance Appraisal Conflicting Goals of Appraisal Create Problems Organization Seeks Information To Improve Systems Individual Seeks Valid 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

Relevant to job performance

Distinguishes Effective & Ineffective Performance

Fair & Acceptable

Performance Standards Managers assume standards are clear Communicate - What is to be done? How well should it be done? © Dr. Dianna Stone

Managers assume standards are clear

Communicate - What is to be done?

How well should it be done?

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

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

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

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

Methods Ranking - Rank order ratees from highest to lowest Behavioral Checklist - Series of Descriptive Statements of Job-Related Behavior Example : ____ 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

Ranking - Rank order ratees from highest to lowest

Behavioral Checklist - Series of Descriptive Statements of Job-Related Behavior

Example : ____ 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

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

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

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

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

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

Steps

1) Counsel Employee about Performance Problem

2) Verbal Reprimand & Warning

3) Written Reprimand & Warning

4) Disciplinary Layoff (Short-term)

5) Discharge

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

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

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

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

Appraisal Interviews Give Feedback daily Encourage participation Judge performance not personality Be specific - provide critical incidents Set mutual goals © Dr. Dianna Stone

Give Feedback daily

Encourage participation

Judge performance not personality

Be specific - provide critical incidents

Set mutual goals