16 PERFORMANCE MANAGEMENT
Contents
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Performance management defined
Performance management: five questions
The performance management cycle
The performance management sequence
What performance management is
What performance management is not
Performance management principles
Developments in performance management
Performance management activities
Performance agreement
Characteristics of good objectives
Agreeing competency requirements
Classification of performance measures
Performance measures criteria
Performance reviews: key features
Preparing for the meeting: the manager’s role
Preparing for the meeting: the individual’s role
What to find out at a review meeting
Conducting a review meeting
Performance review questions
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Listening
Giving feedback
Managing under-performers
Performance management at Astra-Zeneca (1)
Performance management at Astra-Zeneca (2)
Performance management at Astra-Zeneca (3)
Performance management at the Victoria &
Albert Museum
Performance management at Halifax
360-degree feedback: definition and rationale
360-degree feedback model
360-degree feedback methodology
Example of 360-degree profile
Balanced scorecard
Introducing performance management
Performance management: the big issues
What’s it for?
Do we have rating?
How do we get buy-in from line managers?
Performance management: key considerations
1
PERFORMANCE MANAGEMENT DEFINED
A strategic and integrated approach to delivering success to
organizations by improving the performance of the people who
work in them and by developing the capabilities of teams and
individual contributors.
2
PERFORMANCE MANAGEMENT:
FIVE QUESTIONS
1. What do we mean by performance?
2. Can we identify good or poor performance?
3. Can we establish the cause of good or poor performance?
4. How can we motivate people to perform well?
5. Can we do all this fairly and consistently?
3
THE PERFORMANCE MANAGEMENT CYCLE
PERFORMANCE AND
DEVELOPMENT AGREEMENT
Performance review
Managing performance
throughout the year
4
PERFORMANCE MANAGEMENT SEQUENCE
Structure
Job description
Tasks & Responsibilities
Job Competencies
Corporate Strategy
Business Plans
Goals & Targets
Company Competencies
Key Result Areas &
Competencies
Performance and
Development agreement
Evaluation Performance
against KPI’s & Competencies
Information to compare
Performance and KPI’s and
Competencies
Feedback on Performance
Development Needs
Rating & Potential Appraisal
Career & Development Plan
Development Activities
Remuneration Consequences
5
WHAT PERFORMANCE MANAGEMENT IS:
ITS FEATURES AND CONCERNS
•
Aims – performance improvement and personal development.
•
Strategic – concerned with how well the business functions in the longer term and with the
creation of a culture of performance and continuous development.
•
Integrated – aligns individual goals and values with corporate goals and values.
•
Focus – on outcomes (results) and inputs (competencies).
•
Management of expectations – helps individuals to understand their roles and what they
are expected to achieve in terms of both outcomes and competency levels.
•
Measurement, feedback and review – concerned with measuring performance (‘if you
can’t measure it you can’t manage it’), feedback to individuals (self-generated or provided
by their manager) and the review of outcomes as a basis for planning action.
•
Dialogue – concerned with creating a climate in which a dialogue takes place between
managers and individuals to define expectations, discuss outcomes, and agree
development plans in order to achieve mutual understanding of what is to be achieved and
developing people to ensure that it will be achieved.
•
Continuous – performance management takes place throughout the year.
•
Motivation – a powerful means of motivating people through feedback and recognition, and
the identification of opportunities for growth (job enrichment), development (skills
acquisition) and career progression.
•
Role of line managers – performance management is owned and delivered by line
managers.
6
WHAT PERFORMANCE MANAGEMENT
IS NOT
•
The same as appraisal – performance management is about dialogue,
agreement and mutual understanding. It is not a top-down system for judging
the performance of people. It does not exist simply to produce a performance
rating.
•
A system – performance management is not a bureaucratic system that relies
upon procedures and forms to generate outputs. It is a process that involves
people (managers and individuals) working together continually to reach
agreement on what needs to be done and how it should be done.
•
A once-a-year event – the theme of an effective performance process is
‘managing performance all the year round’.
•
Synonymous with performance-related pay – performance management
may generate the information that informs performance-related pay decisions
but can, and many people think should, be detached from the performancerelated pay system so that the proper emphasis can be placed on its
developmental purpose.
•
Owned by the HR function – it is for line managers and their staff.
7
PERFORMANCE MANAGEMENT
PRINCIPLES
•
•
•
•
•
•
•
performance management is managing the business
a management tool which helps managers to manage
driven by corporate purpose and values
to obtain solutions that work
only interested in things you can do something about and get a
visible improvement
focus on changing behaviour rather than paperwork
it’s about how we manage people – it’s not a ‘system’.
8
DEVELOPMENTS IN PERFORMANCE
MANAGEMENT
•
•
•
•
•
•
•
•
•
system
appraisal
outputs
performance-related pay
ratings common
top-down
monolithic
bureaucratic
owned by HR
•
•
•
•
•
•
•
•
•
process
holistic
outputs/inputs
development
less rating
360° feedback
adaptable
flexible
owned by users
9
PERFORMANCE MANAGEMENT
ACTIVITIES
•
•
•
•
Performance agreement – an agreement between the manager and the
individual on the latter’s objectives and the level of competency required (see
slides 10–15).
Performance review – a joint review of the performance of the individual by
means of a dialogue between the individual and the manager (see slides 16–
24).
Personal development planning – an agreement on what the individual needs
to do with the manager’s support to improve performance and develop skills
(see slides in Section 18).
Performance-related pay – may be associated with performance management
through rating but many organizations believe that performance management is
essentially a developmental activity and therefore uncouple performance pay
decisions (see slides in Section 23).
10
PERFORMANCE AGREEMENT
The purpose of the performance agreement is to:
•
agree objectives and competency level requirements
•
agree on methods of measuring performance
•
agree on plans for performance improvement and personal
development
11
CHARACTERISTICS OF
GOOD OBJECTIVES
S = specific/testing – clear, unambiguous, understandable and challenging
M = measurable – in terms of quantity, quality, time or money
A = achievable – challenging but within the reach of a competent and committed
person
R = relevant – to organizational objectives so that they and the individual’s goals
are aligned
T = time-framed – to be completed within an agreed time scale.
12
AGREEING COMPETENCY REQUIREMENTS
Ideally, a role profile should be available (and regularly updated), which sets out the
competency levels required for the role and is aligned to the organization’s
competency frameworks. The agreement and review of competencies can then be
referenced to this profile.
If a profile does not exist, the agreement should be related to the competency
framework for the organization or the relevant part of the organization.
In the absence of either a role profile or a relevant competency framework, the line
manager and the individual have to discuss and agree competency levels for each
of the main aspects of the role. The questions that needs to be answered for each
aspect are:
• What knowledge and skills are required to carry out this task well?
• How will you know that it has been done well?
13
CLASSIFICATION OF PERFORMANCE MEASURES
•
Output – measurable data on results achieved.
•
Outcome (impact) – attainment of defined standard (quality, level of
service etc), changes in behaviour, completion of project or task, level
of take up of service, successful innovation.
•
Reaction – judgement by others: colleagues, internal or external
clients or customers.
•
Time – speed of response or turnaround, achievements compared with
timetables, amount of backlog.
•
Finance – income generated, added value, cost control.
14
PERFORMANCE MEASURES CRITERIA
•
•
•
•
•
•
related to organizational critical success factors
relevant to individual outcomes and competence requirements
cover all aspects of performance
focus on outputs and outcomes that can be clearly defined
verifiable – indicate the data or evidence that will be available
as the basis for measurement
provide basis for feedback and action.
15
PERFORMANCE REVIEWS: KEY FEATURES
•
•
•
•
•
•
•
forward looking – not a post-mortem
exchange of views (dialogue)
measurement
feedback
positive reinforcement
constructive
leads to an agreement.
16
PREPARING FOR THE MEETING:
THE MANAGER’S ROLE
•
•
•
•
•
assess achievements – performance and development
decide on feedback
consider factors affecting performance
points for discussion
future directions and objectives.
17
PREPARING FOR THE MEETING:
THE INDIVIDUAL’S ROLE
•
•
•
•
•
identify achievements
consider reasons for any shortcomings
development and training needs
areas where help or support would be useful
future hopes.
18
WHAT TO FIND OUT AT
A REVIEW MEETING
•
•
•
•
•
•
what individuals have learned or need to learn
where they have got to
where they are going
how they are going to get there
what they believe they know and can do
what help or guidance they require.
19
CONDUCTING A REVIEW MEETING
•
•
•
•
•
•
•
•
encourage reviewee to do most of talking
listen actively
allow scope for reflection and analysis
analyse performance not personality
keep the whole period under review
no surprises
recognize achievement and reinforce strengths
end meeting positively with agreed action plan.
20
PERFORMANCE REVIEW QUESTIONS
•
Open – encourage the individual to talk.
•
Closed – ask specific questions to elicit information.
•
Probe – ask for further details or explanations of achievements
or problems.
21
LISTENING
•
•
•
•
concentrate on the speaker
respond quickly
ask questions to clarify meaning
comment as necessary to show understanding.
22
GIVING FEEDBACK
•
•
•
•
•
•
•
•
build feedback into the job
provide feedback on actual events
describe, do not judge
refer to specific instances
ask questions rather than make statements
get people to work things out for themselves
select key issues – focus on improvable areas
show understanding.
23
MANAGING UNDER-PERFORMERS
•
•
•
•
•
identify and agree the problem
establish reason for shortfall
decide and agree on action required
resource the action
monitor and provide feedback.
24
PERFORMANCE MANAGEMENT
AT ASTRA-ZENECA (1)
Definition of performance management
A continuous cycle of discussions between the employee and the manager to plan
and review work and development.
25
PERFORMANCE MANAGEMENT AT ASTRA-ZENECA (2)
Stage 1
Business roles
Plan
Stage 2
Performance
planning
Evaluate
Stage 4
Stage 3
Performance
Performance
measurement
development
Do
26
PERFORMANCE MANAGEMENT
AT ASTRA-ZENECA (3)
Four stages
1.
Business role clarification – clear statement of role and objectives agreed.
2.
Performance planning – agreement of targets to achieve the ‘plan-do-evaluate’
elements of managing performance.
3.
Performance development – agree skills required and prepare individual
development plan.
4.
Performance measurement – provide ongoing feedback and an annual summary
of an employee’s performance (no overall ratings).
27
PERFORMANCE MANAGEMENT AT
THE VICTORIA & ALBERT MUSEUM
Job description
(updated)
Evidence
(departmental)
Corporate
Evidence
Departmental
(individual)
objectives
Performance
Individual
standards
objectives
plan
Attributes
Personal
Ratings –
Assessment
development
plan
pay
decisions
Countersigning officer review
28
PERFORMANCE MANAGEMENT AT HALIFAX
Performance
planning
Personal
development
planning
Balanced
scorecard
Halifax
development
framework
Manager as coach
Individual
performance
plan
Personal
development
plan
Staff performance
29
360-DEGREE FEEDBACK:
DEFINITION AND RATIONALE
360-degree or multi-source feedback involves the assessment of an individual by a
number of different people: managers, colleagues, subordinates and clients
(external or internal customers) as illustrated on the next slide.
It recognizes that the performance of people is best seen from different viewpoints.
The manager will only have a top-down and therefore partial impression while
important characteristics, for example managing people, leadership and
interpersonal relations with colleagues and clients, may not be measurable.
30
360-DEGREE FEEDBACK MODEL
Manager
Colleagues
Individual
Customers/clients
Direct reports
31
360-DEGREE FEEDBACK METHODOLOGY
360-degree processes rely on questionnaires that ask for an evaluation such as
‘How well does … do …? The headings included in the performance management
group’s orbit 360-degree questionnaire are:
•
leadership
•
team/player/manage people
•
self-management
•
communication
•
vision
•
organizational skills
•
decision making
•
expertise
•
drive
•
adaptability.
Feedback may be provided by a profile as illustrated in the next slide. It is usually
anonymous and may be presented by an external consultant who is available to give
advice and counselling.
32
EXAMPLE OF 360-DEGREE PROFILE
Gives useful feedback
Establishes good working relationships
Open to new ideas
Values other’s opinions
Recognizes achievements
Scale
1
2
3
4
5
33
BALANCED SCORECARD
A method developed by Kaplan and Norton*, which is based on the philosophy that
‘what you measure is what you get’ and emphasizes that: ‘No single measure can
provide a clear performance target or focus attention on the critical areas of the
business.’ Managers want a balanced presentation of both financial and operational
measures. The balanced score card consist of four elements as shown below (these
elements are sometimes varied in individual applications while still retaining the
principle of ‘balance’).
How do customers
see us?
(customer
perspective)
What must we excel
at?
(internal perspective)
Can we continue to
improve and create
value?
(innovation and
learning perspective)
How do we look to
shareholders?
(financial
perspective)
* Source: Kaplan, R S and Norton, D P (1992) The balanced scorecard – measures that drive performance, Harvard
Business Review, January–February
34
INTRODUCING PERFORMANCE MANAGEMENT
•
•
•
•
•
•
•
define purpose
define approach
involve line managers and staff in its development
pilot test
produce guidelines on the process
inform all employees
train managers and all other employees in the process and the skills
required.
35
PERFORMANCE MANAGEMENT: THE BIG ISSUES
What’s
it for?
How do we get
fairness and
consistency?
Do we have
rating?
How do we get
management
buy-in?
36
WHAT’S IT FOR?
Essential to be clear about its purpose, eg developmental, enhancing a performance
culture, and to communicate that purpose to everyone.
37
DO WE HAVE RATING?
In many organizations ratings (eg A = excellent, performs well above expectations, B
= performs above expectations, C = meets expectations and D = performs below
expectations) are an essential part of performance management as a means of
summing up judgements and providing the basis for performance-related pay.
However a growing number of organizations reject ratings because:
•
they cannot convey the subtleties of the outcome of a thorough performance
review
•
they are judgemental and top-down – based on managerial opinion (which can
be biased and inconsistent) and which is passed down to the individual
•
if they are linked directly to performance-related they divert the attention of both
parties away from the primary purpose of performance management, ie
performance improvement and development, to limited considerations of the
financial outcome of the process.
38
HOW DO WE GET BUY-IN FROM LINE MANAGERS?
The biggest issue in performance management is getting line managers to do it well
(or even to do it at all). Many line managers plead that they haven’t enough time and
it’s a waste of time anyhow (they claim that they are doing it already which may or
may not be true). To overcome this problem it is necessary to:
•
obtain strong backing from the top – one of the core values of the organization,
which they should promote, should be that performance management
processes play an essential part in the effective management of the
organization and managers will be expected to support this value
•
involve line managers in the development of the process to achieve ‘ownership’
•
provide training, guidance and encouragement to line management (this is the
role of HR)
•
enlist the support of enthusiastic and capable line managers to act as coaches
and mentors for their colleagues
•
include the management of performance as a key performance criterion for line
managers
•
review the performance of line managers in this respect and require
performance improvements (the responsibility of the manager’s manager right
up to the top).
39
PERFORMANCE MANAGEMENT:
KEY CONSIDERATIONS
•
•
•
•
•
•
performance management is about running the business, it is
what managers do – a natural process of management
success depends on what the organization is and needs to be
in its performance culture
it is the process that is important not the system
focus on development, not pay
based on accepted principles but operates flexibly
effective communication, involvement and training essential.
40
Your Experience
• As employee
– Positive
– Negative
• As manager
– Positive
– Negative
• Main Topics for Improvement ?
41
Performance Management Practice
42
Topics to discuss
• What is Performance Management
• What are methods
• What are procedures
• The use of Performance Management
43
What is Performance ?
Performance = f ( A, M, O)
A = Abilities (Knowledge, Skills, Competencies)
M = Motivation (Personality, Motivation, Drive, Interest)
O = Opportunities
44
Aims of Performance Management
• Overall:
– Increase the performance of the employee and the team
where he/she works, and by doing that, increase the
performance of the organisation (remember the components
of performance in the culture questionnaire)
• Specific 1:
– Provide feedback to the employee about his/her performance
against the competencies of the job and the organisation
• Specific 2:
– Improve knowledge, skills, competencies
– Improve motivation, drive, interest and commitment
– Provide employee with opportunities to grow and to develop
45
Experience 1
• In many organisations completing the appraisal form is more
important rather than the discussion with the employee about
the performance
• Appraisal forms are mainly used for administrative purposes
(checking if everybody is evaluated)
• The conclusions are used for remuneration purposes
• For many employees the process of performance management
(or appraisal) is a ‘black box’
46
Experience 2
• Providing feedback is most important in performance
management
– Focus on the performance review meeting
– Use forms and procedures as a tool and not as objectives in
itself
A blank sheet of paper with some comment could be
more useful than a highly sophisticated form which is not
discussed
47
Experience 3
• Most managers don’t like it
– Esp. providing feedback to the employees
– It would take to much time for them
• Many HR managers / HR professionals see it as a necessary
evil
– Esp. chasing the managers to do it and to provide them
with the results
– Dealing with complaints from employees
• However, most employees like it !
– They are eager to get feedback and to develop (remember
the graph with satisfaction at work and at organisation)
48
Performance Management Process
Planning &
Goal
Setting
Rewarding
Performance
Monitoring &
Feedback
Managing
Performance
Evaluating
Performance
Developing
Performance
49
Roles and Responsibilities
HRM
•
•
•
Employee
•
•
•
•
•
Preparing review meeting
(sometimes completing the
form)
Listening and commenting
the feedback
Making agreements for
coming year
Undertaking actions to
improve performance
•
•
•
•
•
Communication
Preparing System &
Procedures
Getting commitment of top
management
Providing forms
Training managers
Collecting forms after
review meeting
Administration
Follow-up Activities
Manager
•
•
•
•
•
•
•
Completing forms
Preparing meetings
Conducting review
meetings
Summarising results
Concluding marks
Communicating with HR
Monitoring improvement
activities employee
50
Performance Review Meeting
• Agreed actions last appraisal meeting
• Competencies with examples of behaviour, conclusion
and motivation
• Conclusion for
– Remuneration
– Training & Development activities
• Specific points to discuss
• Agreements about performance improvement
• Agenda for next year
51
Topics to discuss
• Performance agreement
• Abilities (Knowledge, Skills, Competencies)
• Motivation, Satisfaction, Drive, Ambition
• Opportunities in and beyond work environment
• New performance agreement
52
Conclusions in the Performance Review
• Rating on Performance
• Rating on Potential
• Use of Ratings
53
Ratings on Performance 1
A
Outstanding performance in all aspects
B
Superior performance, significantly above normal job
requirements
C
Good, all-round performance, which meets the normal
requirements of the job
D
Performance not fully up to requirements. Clear weaknesses
requiring improvement have been identified
E
Unacceptable; performance of many aspects of the job is
below an acceptable standard
54
Comment
When a manager would conclude with a
rating “E, unacceptable”, in an appraisal, he
didn’t do the right job himself: when people
fail in their job, action should be taken at the
time. That action could be demotion, transfer
to another job or discharge.
55
Ratings on Performance 2
Very Effective
Exceeds all objectives and requirements.
Achievements are notable and outstanding and
are far beyond the expectations of the job
Effective
Achieves required objectives and standards of
performance and meets the normal expectations
of the job
Developing
A contribution which is stronger in some aspects
of the job than others; where most objectives are
met but where performance improvements should
still take place
Basic
A contribution which on the whole meets the basic
standards required, although a number of
objectives are not met and there is clearly room
for improvement in several definable areas
56
Performance & Potential




Performance appraisal or performance assessment is used to evaluate
someone’s performance against the requirements and standards of the
job or position filled at the moment
Key performance indicators (KPI’s), balance score cards (BSC) and
performance interviews are useful and effective methods and tools to
support performance assessment
Potential assessment is an assessment against higher level standards
and requirements; it is about the ability and power to grow to higher
levels in the organisation
Present Estimated Performance tool is an effective and efficient
approach for potential management
57
Performance and Potential
Questions:
• Is someone with superior performance
promotable to a higher job ?
• What is the difference ?
58
Ratings for Promotability
A
Is promotable to a higher job on the short
term (within 1 to 2 years)
B
Is promotable to a higher job on the longer
term (within 3 to 5 years)
C
Is not promotable to a higher job, if needed
a transfer to another job could be
considered
59
Combining Performance and Promotability
Not Promotable
Promotable on
long term
Promotable on
short term
Very
effective
Effective
Developing
Basic
60
Combining Performance and Promotability
Not Promotable
Promotable on
long term
Promotable on
short term
Very
effective
Reward them in
special way
Top stars
(retention!)
Super stars
(retention!)
Effective
The mainstay of
the business
Stars
(retention!)
Top stars
(retention!)
Pay attention
Pay attention
Future Stars ?
Extra attention
needed
(up or out)
Question mark;
investigate
Question marks;
investigate
Developing
Basic
61
Strategic Review on Performance Management
Performance
Objectives:
• Improving performance
• Compensate for contribution
Measure : Present capabilities
Potential
Objectives:
• Succession Planning
• Career Development
Measure : Growth of individual
62
Performance
Performance related Competencies are:
–
–
–
–
–
–
–
–
Commercial Awareness
Influencing and inspiring people
Planning and Organising
Analysing and Solving Problems
Decision Making
Delivering Results
Directing and Supporting people
Etc.
63
Potential
Potential related Competencies are:
–
–
–
–
–
–
–
–
Ambition
Energy
Abstract and Strategic thinking
Creativity & Innovation
Receptiveness to feedback
Adapting and Leading Change
Learning ability
Coping with setbacks
64
Link of Performance Management to
other HR activities
•
•
•
•
•
Feedback on Recruitment and Selection
Basis for remuneration and performance related pay
Basis for training & Development
Basis for staff- and succession planning
Source of information for retention-policy
65
Exercises
• Make a performance management model adapted to
your organisation
• Define aims, objectives and methods
• Describe how it works: procedures
• Make forms for performance appraisal
• Practice conducting performance interviews (3 role
plays; as manager, employee and observer)
• Identify how to use performance appraisal results of
the whole organisation
66
The Do’s and Don’ts for Performance
Management
Do’s
•
•
•
•
•
•
.
.
.
.
.
.
Don’ts
•
•
•
•
•
•
.
.
.
.
.
.
67