Calibrating Performance Ratings
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Calibrating Performance Ratings

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A company’s performance management system either hinders or enhances high performance in an organization. The way in which managers assess individual performance and the role of HR business partners ...

A company’s performance management system either hinders or enhances high performance in an organization. The way in which managers assess individual performance and the role of HR business partners in the year end performance review process says a lot about an organization’s maturity when it comes to creating and sustaining a high performance culture. High performance cultures differentially reward their top performers; but this requires high performance distributions. Arriving at such distributions requires a robust performance rating calibration dialogue among managers. This is where HR business partners can play a major role in both implementing the process but also facilitating the performance calibration meetings to surface the differentiating behaviors and results that distinguishes top performers from everyone else.

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Calibrating Performance Ratings Presentation Transcript

  • 1. PERFORMANCE CALIBRATION SYSTEM FORSUSTAINING HIGH PERFORMANCE Malcolm Gabriel malcolmprestongabriel@gmail.com Cell: 734-730-2405 Profile: www.linkedin.com/in/malcolmgabriel Blog: www.malcolmprestongabriel.wordpress.com
  • 2. The following is a summary of various presentations that I designed and delivered across different companies toimplement a performance calibration system to sustain high performance. Embedded images were purchased from Fotosearch www.linkedin.com/in/malcolmgabriel
  • 3. The stock market evaluates a company’s performance relative to its competitors www.linkedin.com/in/malcolmgabriel
  • 4. Company Performance is Relative •  Even if Company B exceeded its EBIT targets, there is still an overall industry ranking as to which companies have outperformed others. •  Once ranked, the market rewards top performing companies through share price appreciation. •  Relativity induces action to exceed market expectations Company A Company B www.linkedin.com/in/malcolmgabriel
  • 5. Evidence of High Performance CulturesWhat is a High Performance Culture? Why strive to be a high performanceA system of beliefs and values centered on culture? continuously creating break-through We need transformational change, not just performance. incremental improvement. Leverage the energy and benchmark of the top performers to drive up the performance of the rest of the organization.What does it look like?§  High performance cultures distinguishably Create the environment for employees to be and achieve more than they can imagine. identify, recognize and reward top performers§  Expectations of performance and leadership are continuously raised for everyone§  Lower performers are identified and proactively managed§  New “talent” replaces low performers§  High sense of accountability for outcome§  Rate of learning is exponential www.linkedin.com/in/malcolmgabriel
  • 6. High Performance Cultures sets the benchmark“relative” to others and distinguishably rewards the top performers www.linkedin.com/in/malcolmgabriel
  • 7. The relative standard becomes the benchmark New system Revisit Objectives:Objective: Produce 10 introduced Produce 12 Downsizing Average Team Production:widgets by December by December. 14 widgets January June December Capital budget Someone found a way to The relative standard becomes cuts improve their process the benchmark even if performance exceeded the original target. www.linkedin.com/in/malcolmgabriel .
  • 8. High Performance distributions distinguishably reward their Top Performers 60% 60% 50% Distinguishably rewarding top 40% performers in a fixed envelope 30% 20% 15% requires a very aggressive 20% 5% distribution 10% 0% Below Meets Meets Exceeds Top % Bonus % Bonus % Bonus % Bonus Payout Payout Payout Payout #% of Combined Annual Base Salary Otherwise, why Fixed bonus envelope bother?Motivation = Reward > Effort relative to other’s rewards for their efforts. www.linkedin.com/in/malcolmgabriel
  • 9. Some challenges•  Distribution level•  The size of the evaluation pool•  Including exits throughout the year•  New promotes•  Stigma attached to “fit”•  Downsizing and the bottom ratings•  Exit and renewal•  Timing of evaluations www.linkedin.com/in/malcolmgabriel
  • 10. Evolving expectations in an ever evolving performance year Don’t become a pinball!In an ever changing environment, continuously clarify the deliverable and the expectation of performance. Expectations of EP Performance Performance Rating = D > EofP D Deliverables “show me how you measure me and I’ll tell you how I’ll behave?” – Eli Goldratt www.linkedin.com/in/malcolmgabriel
  • 11. Performance rating calibration meetings arenecessary to identify the relative benchmark in an ever evolving performance environment www.linkedin.com/in/malcolmgabriel
  • 12. Calibrating on the relative performance benchmark is necessary because:•  Employees generally: •  have visibility to each others’ contributions and overall effectiveness •  share their performance ratings •  are very aware of which environments are more difficult than others to achieve results •  are aware of windfall environments that could have affected results •  are acutely aware of which are “favorites”•  Assigning performance ratings that are incongruent with real achievement has a profoundly negative effect on employee morale and aligning their energy to the desired behaviors•  Getting to a common understanding of “real achievement” is the toughest and most necessary part of the performance evaluation calibration discussions Profile: www.linkedin.com/in/malcolmgabriel / Blog: www.malcolmprestongabriel.wordpress.com
  • 13. Performance rating calibrations r o Toni May Calibrating Performance Experience expectations Environment Impact Role What is: • Exceeds Expectation? • Meets Expectation? • Partially Meets? Performance for a “Meets” Individual Expectations of 11.5 Nikita Slobodkin Developing a “SharedUnderstanding” of “Meets” 11 Toni Mayor for a specific positione.g. 10 widgets by December 10 Michael Coulson 9 Jack Nicholson www.linkedin.com/in/malcolmgabriel
  • 14. Performance rating calibrations – differentiating performanceBefore the roundtable:•  Complete individual evaluations of performance and leadership.•  Evaluate performance against objectives, expectations of performance and peers.•  Prepare documents with concrete examples, citing the context, environment, experience and impact of the performance.At the roundtable:•  Discuss process and ground rules for giving input into each others ratings distributions and employee appraisals•  Establish a common understanding of the reasons for the emerging benchmark•  Balance performance ratings to target distributionAfter the roundtable:•  Rollup and consolidation of performance ratings across different departments or business units in the organization•  Communicate performance rating after approval of distribution•  Initiate development plans or performance improvement plans for the bottom performers•  Begin objective setting planning for the following year www.linkedin.com/in/malcolmgabriel
  • 15. At the performance rating calibration, be ready for “Why?”: 9-­‐B loc k  G rid P erformanc e  R ating  &  L eaders hip  C ompetenc y  R ating 5 7 8 9 Key Questions E X C •  Will the rating be a surprise to E E D peers and other managers? S •  Will the “exceeds” rating on an objective be a surprise to 4Performance Rating (Y) 4 5 6 M customers and internal clients? •  Is the “exceeds” rating on an E E T objective affected by a “windfall”? 2.5 •  Was the result really a result of E X 1 2 3 their individual effort? P N E O C T T A M T E I T I O N 1 2.5 4 5 DEVELOPMENT NEET PROFICIENT STRENGTH Leadership Competency Rating (X) A 9-block grid is common across many companies and In some companies the x-axis may denote “potential” or industries and reflects the triangulation of an individual’s “runway” and involves an assessment of an individual’s achievement of results and demonstration of certain potential to develop and grow into high levels in the leadership traits. The leadership competencies will vary by organization. company based on the cultural emphasis.
  • 16. Performance rating calibrations Performance Did Not Meets Meets Exceeds Is Richard Nixon’s performance better 1. Elvis Presley (MG) 1. Anne-Marie Slobodkin (QR) Strong than Charles Bronson N/A (MG)? 2. Richard Nixon (FA) 2. James T. Sullivan (QR) 3. Michael Wazalski (FA) 1. Mary-Jane Lewis (MG) 1. Charles Bronson (MG) 1. Bruce Nick (MG) 2. James T. Kirk (FA) 2. Maryln Munroe (FA) 2. Catherine Callaway (QR)Leadership Proficient 3. Roger B. Ellis (QR) 3. Jean-Luck Picard (FA) 4. Richard Snider (QR) 5. Chris Lee (QR) Is Christine Tucker’s performance better than 6. Christine Tucker (MG) Michael Jackson (MG)? Jackie Welchen (QR) 1. Michael Jackson (MG) Development 2. John Doe Needs 3. Jane Smith * Names are fictitious
  • 17. Performance rating calibration Deparment A Department B 58% 74% 80% 60% 39% 60% 40% 40% 9% 13% 20% 3% 20% 4% 0% 0% 0% Needs Improvement Solid Performer Strong Performer Top Performer Needs Improvement Solid Performer Strong Performer Top Performer Department C Department D 71%80% 80% 62%60% 60% 32%40% 21% 40%20% 7% 6% 0% 20% 0%0% 0% Needs Solid Performer Strong Performer Top Performer Improvement Needs Improvement Solid Performer Strong Performer Top Performer How do the distributions compare between departments? www.linkedin.com/in/malcolmgabriel
  • 18. Avoiding pitfalls in evaluating high performance www.linkedin.com/in/malcolmgabriel
  • 19. Avoiding pitfalls in evaluating high performanceEvaluating the role; not Rating employees favorably because they are in critical roles rather thanthe employee rating their performance or leadership attributes within the critical roleRanking for downsizing Ranking employees for downsizing rather than ranking employees for their overall end of year performance ratingNot clearly Not rating at employee Needs Development on leadership or performancedistinguishing b/w relative to peers because the employee received an Exceeds rating onperformance and performance or leadership relative to peersleadershipDefaulting a rating Automatically ranking a new hire or promotion as a Needs Developmentbased on time in roleRanking based on Focus on the most recent examples of behaviour or performance ratherrecent incident than the entire performance management cycleRanking based on one Base the evaluation on one incident, good or badincident www.linkedin.com/in/malcolmgabriel
  • 20. Surface examples in the performance rating calibrationmeeting that distinguishes top, solid and lower performers www.linkedin.com/in/malcolmgabriel
  • 21. Examples of behaviors that resulted in a “Meets” rating 60% 60% 50% 40% 30% 20% 15% 20% 5% 10% 0% PME Meets Exceeds Exceptional•  Self-induced journey outside of “comfort” zone.•  Initiating ideas and driving them through to completion.•  Complete a job even if it is not within their accountability.•  Meet all their objectives within an acceptable range of the performance metrics, and is exceeding some of their stated objectives and relative to their peers•  Embrace change, speaking positively, and presents mitigation strategies along with risks.•  Entrepreneurial and have or work with for-profit and / or not-for-profit organizations on a part-time basis, and show this entrepreneurial flair inside Bell through their ideas and execution.•  New promotes also shined as solid contributors often inspiring confidence from others who normally react with surprise that the employee is a new promote•  Contribute ideas across functional expertise, but they also make cross-link connections for others.•  Eloquently connect technical and global view and make cross-domain link connections•  Ensured that there were “no surprises” on budget items.•  Good management practices, and above average employee engagement scores To some managers this was described as “meets” while to others this was described as “exceeds” or “exceptional”. www.linkedin.com/in/malcolmgabriel
  • 22. Examples of behaviors that resulted in Exceed Expectations 60% 60% 50% 40% 30% 20% 15% 20% 5% 10% 0% PME Meets Exceeds Exceptional•  Excel at cross-functional linkages, often gaining commitment from other business partners to propose items previously not supported•  “end-to-end” accountability and ensure mutual understanding•  Winning mindset, collaborating, showing linkages,•  Inspiring commitment, in new and ambiguous situations with no predetermined procedures•  “win over” critics by collaborating “behind the scenes” to iron-out assumptions•  Demonstrate interpersonal tact and charming influence in high politically sensitive projects•  Perceived by peers as “business-focused”, yet perceived by clients as the “technical-expert”.•  Always (not only often) seeing new ways to run the business, seeing the long-term picture•  Special projects and balances workload through appropriate delegation•  Demonstrate confidence in self and builds confidence in others.•  Showing tact in apportioning accountability To some managers, the individual’s placement on their compensation range was a key factor in evaluating whether this type of action and behavior culminated in a meets or exceeds rating. www.linkedin.com/in/malcolmgabriel
  • 23. Examples of behaviors that resulted in Below Meets Expectation 60% 60% 50% 40% 30% 20% 15% 20% 5% 10% 0% PME Meets Exceeds Exceptional•  Shows consistent negative behaviour to new ideas without exploring the merits or assumptions•  Communicates in a “silo” mentality•  Negative attitude•  Did not induce or initiate an improvement change in the absence of a top-down change project•  Doesn’t carry the load that peer groups have done or achieved.•  70% of the scope and responsibility is comparable to a lower level position. Specifically, the employee hasn’t elevated the role significantly to be comparable to the expected outcomes of the position.•  Comments like: “it’s not part of my task” / “not in my job scope” www.linkedin.com/in/malcolmgabriel
  • 24. Once leaders discuss how they arrived at a Solid rating or an Exceeds rating, they started adjusting their own calibration points on a performance standard.Inevitably, ratings then get adjusted upwards or downwards Profile: www.linkedin.com/in/malcolmgabriel / Blog: www.malcolmprestongabriel.wordpress.com
  • 25. Reactions and Approaches to the those with lower performance ratingsPotential reactions Description Recommended ResponseDisbelief “I don’t believe it.” ; “This can’t be happening.” Confirm that it is happening.Heightened Anxiety Concerned about stigma and their future Don’t rescue; Acknowledge feeling Don’t debate the “whys”; Regular feedbackAnger / Mistrust in the “Why me?” Don’t rescue; Don’t debate the “whys”; AcknowledgeSystem “Shouldn’t that person be there before me?” feelingReduced Self- Experience a “knock” in their self-esteem after Acknowledge feeling; Don’t rescue; Build confidenceConfidence hearing their ratingDepression A more sever form of reduced self-confidence Do NOT avoid the employee in hallway interactions or Solemn silence and / or noticeable stressful non- meetings, verbal behaviour Engage the employee in all possible situations to make them an important part of a decision or outcome. Recommend the Employee Assistance Program (EAP)Sick and Disability In more severe cases, it can be expected that Respect the disability management guidelines, employees could “call in sick” as a result of the Schedule many face-to-face time anxiety associated with the rating Re-build their confidenceRelief Most people suspect something is “in the wind”. Respond with empathy and follow up with strong support to make things better. Always close off with “I’m here in case you need to talk”.Acceptance How do I fix this and change the situation? Coach / developWhat’s Next? Help me get through this quickly Coach / develop www.linkedin.com/in/malcolmgabriel
  • 26. Here is what to do if you find yourself at the BOTTOM of the performance ratings•  Perception is reality.•  Partner with your leader to change Your situation.•  Acknowledgement gets collaboration.•  Get to know how you are being perceived.•  Surface assumptions about actions and perceptions.•  Get to know what others are doing relatively well.•  Is the role and / or environment right for you?•  Plan for a “come back”.•  Build an action plan to over deliver. www.linkedin.com/in/malcolmgabriel
  • 27. Here is what to do if you find yourself at the TOP of the performance ratings•  Show humility•  Share your learning and experiences with others•  Build confidence in others•  Set higher standards for yourself•  Mentor / coach those at entry level positions•  Consistently re-invent yourself www.linkedin.com/in/malcolmgabriel
  • 28. Next….•  Begin the process for cascading corporate and business unit objectives, targets and metrics•  Conduct goal setting calibration discussions just like you did with performance ratings•  Establish what a “meets” and “exceeds” looks like for each goal for every employee relative to their experience and position within their compensation range•  Communicate these to employees with a disclaimer that these will be influenced by the relative contribution of each employee as well as the changing circumstances within the performance year Profile: www.linkedin.com/in/malcolmgabriel / Blog: www.malcolmprestongabriel.wordpress.com
  • 29. CONTACT ME FOR HELP ON IMPLEMENTING PERFORMANCE RATINGCALIBRATION SYSTEMS FOR SUSTAINING HIGH PERFORMANCE IN YOURORGANIZATION Malcolm Gabriel malcolmprestongabriel@gmail.com Cell: 734-730-2405 Profile: www.linkedin.com/in/malcolmgabriel Blog: www.malcolmprestongabriel.wordpress.com