This document summarizes the performance management system used by Rainbow Trust, a UK charity that supports families of children with life-threatening illnesses. The charity introduced a new performance management scheme in 2010/11 to help increase the number of families it supports from 1,000 to over 1,700 currently. The system ties individual employee objectives to organizational goals and business plans. It includes setting objectives, mid-year reviews, year-end performance ratings calibrated across managers, and links to a performance-based pay scheme. The aim is to sustain employee engagement and focus effort on key priorities to better achieve the charity's mission.

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CASE STUDY
PERFORMANCE
MANAGEMENT AT
RAINBOW TRUST
Published: 27 November 2014
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3. CONTENTS
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Organisation profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Who e-reward interviewed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Sustaining employee engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Objectives of the scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Business plan underpins performance management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Personal development review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Year-end review and ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Performance pay link . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Line manager training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Lessons learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
www.e-reward.co.uk 3

4. PERFORMANCE MANAGEMENT AT RAINBOW TRUST
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Performance management at Rainbow Trust
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Rainbow Trust, a charity that supports the families of
children with life threatening or terminal illness,
introduced performance management in 2010/11 as part
of a strategic plan to produce a step-change in the
number of families it is able to support.
Sustaining employee engagement
Four years down the line, the number of supported
families has increased from around 1,000 to 1,700 and all
parts of the organisation now work “more
collaboratively,” according to Anna Powis, HR Manager at
the Trust. Fundraising has also benefited, with income
rising from £3.98 to £4.65 million over the same period.
The new performance management scheme, and the
more recent introduction of performance pay, is also
“helping to sustain employee engagement” at the charity.
Data from an annual employee survey, which regularly
achieves 100% participation, demonstrate that a high
proportion of employees fully understand the business
priorities.
Powis says: “This is a real sign we are producing
alignment between individuals and the organisation,
helped by the performance management system.”
ORGANISATION PROFILE
Name: Rainbow Trust.
Employees: 100.
Business: Charity providing support to families with
children who have life threatening or terminal illnesses.
Its 50 family support workers join families in their own
homes and provide whatever emotional or practical
support is needed. They may attend hospital
appointments with parents, sit by the bedside of the sick
child to give parents a break and take worried siblings out
for the day. It supported 1,692 families in 2013/14.
Location: Rainbow Trust has nine regional offices and a
head office in Surrey.
Financials: In 2012/13, the charity had income of £4.65
million.
Web site: www.rainbowtrust.org.uk
WHO E-REWARD INTERVIEWED
Anna Powis is the charity’s HR Manager. She joined the
charity in 2010 and is part of the Rainbow Leadership
Team. She heads the HR function and is passionate about
strong and fair people management.
Her background is in the corporate sector, initially in sales
training, moving into the IT industry, where she remained
for 14 years. In 2001, a change in career direction from
project management to human resources led to her
becoming HR & Operations Director and part of the
senior management team at an IT software and services
company.
Powis is a chartered member of the CIPD.
Objectives of the scheme
Four years ago, Rainbow Trust had settled into a position
where it was able to support around 1,000 families, which
it calculated to be only one in ten of those needing its
help. A decision was taken to introduce performance
management for both the care giving and fundraising
parts of the organisation, underpinned by a purpose
statement:
“To introduce a performance management and
performance-related pay process which is fair,
endorses Rainbow Trust values, encourages
exceptional performance and provides recognition to
both individuals and teams for exceeding the agreed
performance expectations of the families and children
Rainbow Trust exists to support”.
Powis explains: “The objectives behind the introduction of
a performance culture were to foster a greater focus on
the commercial side of the organisation, as well as to
attract good quality staff.” Her team were conscious that
performance systems can appear arbitrary, “so we were
always looking to ensure that ours makes a difference”.
The introduction of performance management in
2010/11 was followed by performance pay in 2011/12.
Powis says: “Our system is quite complex and we knew it
would take time to embed. Separating the two elements
provided people with a chance to get used to the new
performance management cycle before pay came into
the equation.” She accepts that an increase in staffing
over the past four years is also a factor in the charity’s

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ability to support more families, but adds that “the focus
provided by performance management is also key to our
success; a new drive for efficiency has accompanied the
introduction of performance management”.
Business plan underpins performance
management
Performance management at Rainbow Trust is a
continuous cycle of review and improvement. The setting
and reviewing of performance and development
objectives takes place annually, starting with the
development of each year’s business plan. This plan,
which involves all functions working together, is
presented at an annual staff conference each May.
Powis says: “This is a highly participative event. All
employees get the chance to question the senior
leadership team of five. The formal presentation usually
only lasts around 20 minutes while the Q&A that follows
can last a further hour.”
The senior leadership team (SLT) develops organisational
objectives – “Team Rainbow Trust Objectives” – based on
the business plan once the latter is confirmed, and these
are cascaded to line managers in May/June each year. For
example, the five business objectives for 2013/14 include:
“Support 1,500 families during the • period and increase
referrals by at least 10% per care team.”
• “Cross-organisational improved planning and reporting
demonstrated by 95% of deadlines met over a 12-
month period.”
Other objectives cover raising the charity’s income and
public profile and working effectively with volunteers.
“It is then up to managers and individual employees to
take these organisational objectives and translate them
into individuals’ objectives by mid-July each year,” Powis
explains.
The “how” is as important as the “why” at the charity, so
individuals’ objectives are split into three types:
• Business objectives: Individuals will typically have three
to five objectives in this area. Business objectives form
a more important part of the performance plans of the
senior leadership team and other managers than non-managerial
staff.
• People objectives: Objectives should be directly aligned
to, and support, the development of people and
relationships. Powis says: “This is all about how we
work together, across the organisation.” Again,
objectives are listed in order of priority, so that the first
is more important than the fifth.
• Personal development: “This is critical, as lifelong
learning is central to Rainbow Trust,” says Powis.
Employees and managers are asked to list in order of
priority a maximum of two personal development
priorities – for example, one skills-based and one
behaviour-based. There is an explicit link between these
objectives and an individual’s personal growth,
competency development or career development plan.
An employee’s performance and development review plan
is designed to be a living document and the HR team
recommends that line managers look at those of team
members every quarter, particularly if there has been a
change in the way of working.
Powis says: “In my own department, our focus has
recently been on making the HR system more user
friendly. However, part way through the PM cycle we
provided our 50 family support workers with computer
tablets, but realised the existing system would not work
on these so have altered our own objectives to
incorporate investigating a new HR system, rather than
making the old one more user friendly.”
Personal development review
Personal development has a separate cycle to
performance management, starting in October each year.
Powis explains: “Development is all about looking forward,
whereas performance management is reviewing what has
gone on in the past year.”
Employees have a career discussion with their line
manager during which they are assessed against the
charity’s in-house competencies. Managers then agree
personal development objectives for the next two to
three years with employees. “These discussions are
supposed to be very positive and not about people having
to prove themselves,” Powis stresses.
The SLT meets in November for a people planning
meeting, during which each employee is placed in a nine-box
grid, based on their performance, potential and career
aspirations. “Not all of our employees want to become
managers,” Powis points out.
A mid-year formal check-in takes place in December,
when managers and employees have discussions around
progress against objectives, including whether any
adjustments in the timescale for meeting them is
required. Powis adds: “This is also the point at which a
manager is expected to highlight any concerns about
under-performance so that there are no surprises at year-end.”

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Year-end review and ratings
Two year-end review meetings are held between
employees and managers as part of the performance
management process. The first is primarily for the
employee to put forward their summary of the year and
to comment on how they have met each objective. “The
manager’s role at this first meeting is to understand the
employee view, not to provide ratings of their own,”
Powis says. The manager proposes a performance rating
to a calibration committee and a second meeting is held
after the rating is agreed to cascade the overall rating via
the line manager. The calibration committee is made up
of leadership team members and an external facilitator.
“With ten offices, we are quite dispersed, so it’s very
important that ratings are consistent and fair,” Powis
says. The calibration committee will confirm or question
the rating put forward by an individual’s line manager.
“We believe the system is fair because, typically, eight
people are involved in agreeing ratings,” she adds.
Calibration comments on an individual’s performance
management review should include a summary of the
year, the reason for the overall performance rating and a
comment on priorities for the following year. This
committee will also determine the Team Rainbow Trust
rating used to determine the “team” element of
performance pay (see below).
Rainbow Trust uses a five-point rating scale, but one in
which a “3” rating is not in the middle: “We are trying to
differentiate in the system, so do not want two relatively
poor ratings for ‘1’ and ‘2’, as managers would simply not
use a ‘1’,” Powis explains.
The ratings are:
1: Did not meet most key objectives. • An employee had
an unsatisfactory year and did not meet expectations
on the most important objectives set.
• 2: Met most key objectives.
• 3: Met key objectives. Met expectations on most key
objectives and exceeded some objectives.
• 4: Exceeded key objectives. Exceeded expectations on
the most important objectives and met expectations
on others.
• 5: Significantly exceeded most key objectives.
Significantly exceeded expectations on the most
important objectives and met expectations on others.
There is no forced distribution of these ratings across the
organisation, although Powis and her team do have
expectations for what proportion of employees will
receive each rating – for example, the largest single group
of employees is expected to gain a “2”.
Objectives are prioritised and weighted according to
employee function – for example, people managers will
have a higher weighting attached to people objectives,
compared with members of the SLT, whose objectives are
more closely aligned and weighted to the business
results.
Performance pay link
Performance pay, which was introduced in 2011/12, is
intended to provide fair financial reward for individual
and team performance, as measured by an individual’s
performance rating and a rating for the organisation as a
whole, measured against the business plan-related Team
Rainbow Trust objectives.
Total annual pay awards are made up of a consolidated
increase in basic pay and an unconsolidated performance
element, typically split 40/60. The value of each element
of the pay award varies with the individual’s performance
rating. For example in 2012/13:
• An employee rated 2 – Met most key objectives –
received 1% consolidated increase in basic salary plus
a one-off performance payment of 1.25%.
• An individual with exceptional performance, rated 5,
received a 1.75% consolidated increase and 3%
performance pay.
There is also a facility to flex the total pay award
individual employees receive. “It needs to be complex to
be fair,” Powis argues. The flex element, which can
increase the award to a level “5” performer by up to 40%
in a good year, and conversely depress that of those rated
anything under a level 4, is designed to take account of
role responsibility and overall Team Rainbow Trust
performance.
Line manager training
“The challenge for us is that Rainbow Trust is a dispersed
organisation, meaning we rely on line managers to
cascade all elements of the scheme effectively to their
teams. This does require on-going training to ensure
messages are embedded,” Powis says.
The HR team recognised that the new performance
management system would take time to embed, so
started by training line managers separately, focusing
particularly on conducting effective personal
development meetings with employees.
In the first two years of the system, the HR team did
have to pass back some ratings that managers
recommended – “all at the top end of the distribution” –

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but in 2012/13 all were within the expected range,
“which shows the system is embedding,” Powis adds.
“Initially, the focus in our communications with managers
was all around differentiation, for example, making it
clear that there should be a range of ratings in each
team. We also stressed that it is the manager’s job to
both celebrate successes, but also to manage poor
performance.”
The HR role at Rainbow Trust is to support managers to
use the system, to provide training (including as part of
induction), fielding questions and administering the
system (processing forms and highlighting impending
deadlines). Powis and colleagues have recently reviewed
the performance management process, for example,
asking managers and employees for their views on its
usability.
This feedback will be used to develop the system. She
adds: “Already we realise that we need to do more on the
communications side as the feedback shows that
employees and managers are not aware of some aspects
of the scheme.”
Lessons learned
Powis shared with e-reward some of the key lessons
learnt over the past couple of years:
Senior buy-in:Work hard at obtaining • this at the
earliest possible stage.
• Keep communicating: Put out the message that
performance management will “not go away” but is a
way of helping the organisation reach its objective of
supporting more families.
• Make it live: Powis says: “We recognise that we may
have sat back a bit in year three, so now need to up
our game and keep communicating.”
• Work with line managers: The charity focused initially
in its manager training on explaining the process. Powis
recognises that it now needs to give them the
leadership skills to work the system effectively.
• Performance management is not an HR add-on: PM is
not a nice-to-have addition, but a vital part of reaching
the organisation’s goals. “Our own personal
development is as important as that of the
organisation, we need to spend time on ourselves at
some point in the year,” Powis concludes.