Performance Management Cycle

Setting Objectives, defining what is needed

Performance Planning

Reset objectives Action Make changes

Enabling staff to deliver

Staff and the Organisation

Performance and Development Reviewing

Taking stock of achievements, diagnostics

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
Mission HARVARD COLLEGE LIBRARY

What
Organizational Priorities

How

Values
Your

UNIT OR DEPARTMENT

Departmental Priorities

PERSONAL

Your Major Areas of Responsibility and Individual Priorities

Knowledge, Skills and Behaviors

Performance Development Process

The Performance Cycle

2001: December 21 2002: June-July

2002: May 2002: AprilMay 2002: March 2002: DecemberJanuary

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
a key to Performance Management
All efforts must be aligned with overall goals and strategies of the organization.

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 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

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 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 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 Employees 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 agencys 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

Monitor

Plan

Develop

Reward

Review

Stage 1 Individual Performance Planning

Stage 1 Planning Work goals Competencies Learning Plan

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.

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

Stage 2/3 Monitor and Develop

Monitor

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.

Develop

Stage 2/3 Monitor and Develop Feedback Coach Adjust goals

 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

Daily performance management

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.

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.

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?

Choices include: Immediate supervisor only In addition to the immediate supervisor
Employee (self) Peers and coworkers Internal and external customers Subordinates

 Trait based Behavior based

Approaches to designing an appraisal form

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 jobrelated rewards such as visible project assignments. Even thank you and recognition for a job well done are rewards!!

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!!!!!

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)

Id 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

Performance Management
Rewardor Take Reward or Take Corrective Action Corrective Action Set Standards

Provide Feedback

Measure Performance
Dr. Dianna Stone

 Dr. Dianna Stone

Conflicts in Performance Appraisal

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

Organization Seeks Information On Which To Base Rewards

Individual Seeks Extrinsic Rewards

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 Units Produced Error Rate Personnel Data Absence Rate Turnover Tardiness

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 Behavior
Example: ____ Comes to class on time ____ Courteous with clients ____ Sleeps on the job 20% Below Average 40% Average 20% 10% Above Excellent Average
Dr. Dianna Stone

Forced Distribution
10% Poor

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 Average Above Excellent 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