Transcript Slide 1

Presented by
Cor Faling
Mosedimosi Business Training
Performance Management
2
Agenda
• Contribution of performance management to
organisation’s critical success factors
• Performance management procedures
• Performance contracting
• Performance tracking and corrective action
• Reward, remuneration and communication
• Practical considerations
3
Critical success factors
Performance management is about
having everyone succeed and improve
4
Who is “Everyone”
5
Performance management is not
just annual review time
6
Structuring for success
Managers and employees need the
confidence & competence to
• set goals
• observe performance
• give & receive feedback
• deliver and digest tough
messages
• create development plans
7
Figure 1: Performance Management Model
Three Year Performance Cycle
Balanced Score Card
(Critical Few for Each
Year)
Training for Managers
and Employees
1
Business Planning
(Strategic Priorities)
Second Review 4
for Performance
& Development
Update for
Team and
Individuals
5
Third Review
Individual
Appraisal
Discussion
6
Compensation
and Reward
Plans for
Individual
Performance
and
Development
Individual
Performance
Contracting
NEXT YEAR/S
PLANNING - EVALUATING - FEEDBACK - COACHING
8
2
First Review 3
Performance &
Development
Update for
Team and
Individuals
Diagram 1: Performance Management Elements
Business Strategic Plan
Operating Plans and Role Clarifications
Team Planning and Role Clarification
Individual Goals
Day to day Management and Communication About Performance
Formal Performance Reviews
Efficient, Effective, Enduring Organisation
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Definition
• Performance management is a
business process that links what
individuals and teams do on a daily
basis with the larger goals, values and
cultural practices of the company and
the needs of its customers
10
Enduring organisation
11
Definition
• It is a process for establishing a shared
understanding about what is to be
achieved and how it is to be achieved; it
is an approach to managing people that
when done well, contributes to an
enduring and healthy organisation
12
Toolkit
• The toolkit takes the ‘theory’ and ‘jargon’ out
of performance management.
• The toolkit contains a comprehensive set of
line manager friendly policies, procedures,
and paperwork
• Can be used as training, support and
administrative materials to launch and sustain
an integrated performance management
process and system
13
Key elements of PM process
• It is a business process
• Shared understanding what and how to
be achieved
• It is about managing people
• Brings organisational durability
• Driven by competencies
14
15
A business process
• It is about the everyday actions and
behaviours people use to
– deliver the goals of the organisation to meet
customer needs,
– improve performance and themselves
– cannot be divorced from the management
and business processes of the organisation
16
Shared understanding
• Individuals and teams need to have a
common understanding of how their
roles connect to the business mission
and goals of the organisation
• To improve performance they also need
to know what superior performance
looks like, and how to achieve it
17
Shared understanding
18
Definition of performance
• Performance can be described as a set of
– tasks
– goals
– behaviours
– results
– or any combination of these elements
19
Approach to managing people
• The focus of performance management is on
connecting people to one another and to the
larger organisation and its values
• The main emphasis is on how to get people to
work together and support one another to
achieve shared aims
• It puts the responsibility on managers to work
effectively (through coaching and motivating) with
those for whom they are accountable
20
Approach to managing people
21
Increases durability of organisation
• Performance management has a clear
purpose. It is about delivering success
for individuals, teams, and the
organisation
22
Driven by competencies
• Competency: the key personal skills and
knowledge that enable individuals to perform
their work
• Competencies are the only common
denominator that can be used across human
resource systems consistently
• A set of competencies used to define any
(specific) job can be applied consistently to all
individuals in that specific job or job category
23
24
Focus area 1: Structure for success
• Actively align work unit, team, and
individual goals with organisation goals
• The starting point is always the
organisation’s strategic goals
• Establish and reinforce the importance of
core competencies and job competencies
25
Focus area 1: Structure for success
Support line managers to
• use performance management across a
variety of people applications
• reward high performing groups and
individuals
• target poor performers for improvement
and/or termination
• steer special development initiatives such as
employment equity planning
• take responsibility for both the technical and
people component of their role
26
Focus area 2: Commitment
• Transfer responsibility to the line function
• Increase employee involvement in the
operation and administration of PM
• Provide ongoing training to
– executives
– managers
– Employees
27
Focus area 3: Assessing results
• Use a ‘balanced’ scorecard of criteria to
monitor and fine-tune performance
management processes. Involve all relevant
stakeholders in the evaluation process
• Performance management is an approach to
managing people and performance that
recognises the fluid, dynamic and ever
changing nature of the world of work
28
Focus area 3: Assessing results
• The assumptions that guide the use of
performance management are that
customers, stakeholders and context are the
chief drivers of PM practices
• PM in this scenario is very much an ongoing
communication process, co-determined and
undertaken in partnership, between
employees, managers, supervisors, and
customers
29
The role of HR and SDF
Performance
management is a
whole work system
that begins when a
job is defined as
needed. It ends when
an employee leaves
your organisation.
30
The role of HR and SDF
• Develop clear job descriptions
• Select appropriate people with an appropriate
selection process
• Negotiate requirements and accomplishmentbased performance standards, outcomes, and
measures.
• Provide effective orientation, education, and
training
• Provide on-going coaching and feedback
31
The role of HR and SDF
• Conduct quarterly performance development
discussions
• Design effective compensation and recognition
systems that reward people for their contributions
• Provide promotional/career development
opportunities for staff
• Assist with exit interviews to understand WHY
valued employees leave
32
Discussion
One of the biggest challenges in
performance management from an
HR perspective is to obtain
commitment from line
management. What is your
experience?
33
Balancing measures
• Balancing measures is a strategic
management system for achieving longterm goals
• Organisations use measures in four
categories
– financial performance
– customer knowledge
– internal business processes
– learning and growth
34
35
36
Family of performance measures
In each phase of performance planning,
management, and measurement
– the customer
– stakeholder
– and employee
are considered in balance with the need to
achieve a specific mission or result
37
Need for a balanced approach
• A balanced approach allows you to
consider all the important operational
measures at the same time, letting you
see whether improvement in one area is
achieved at the expense of another
• Key indicators should tell you how the
organisation is doing
38
Creating success
• This proven approach to strategic
management imbeds long-term strategy into
the management system through the
mechanism of measurement
• It translates vision and strategy into a tool that
effectively communicates strategic intent and
motivates and tracks performance against
established goals
39
Strategy
• A strategy is a shared understanding about
how a goal is to be reached
• Balancing measures allows management to
translate the strategy into a clear set of
objectives
• These objectives are then further translated
into a system of performance measurements
that effectively communicates a powerful,
forward-looking, strategic focus to the entire
organisation
40
Employee perspective
41
Employee perspective
• Focuses attention on the performance
of the key internal processes that drive
the organisation
• It directs attention to the basis of all
future success—the organisation’s
people and infrastructure
42
Customer
perspective
• Considers the organisation’s performance
through the eyes of a customer, so that the
organisation retains a careful focus on
customer needs and satisfaction
• The private sector recognises the importance
of the customer and makes the customer a
driver of performance
43
Business perspective
• The financial implications of doing
business
• The business processes needed for
organisational efficiency and
effectiveness
44
Best practice in balancing measures
• Strong leadership that supports the adoption
of balanced measures as a feature of
organisational management and
accountability
• The capability to communicate effectively and
the organisation’s ability to communicate to
decision makers
• The knowledge that customers, employees,
and stakeholders understand and support the
organisation’s initiatives
45
Balancing measures
46
Generic principles
•
•
•
•
•
47
Good product or service
Good image
Good availability/accessibility
Good employer
Continuous improvement
Establishing measures
A most crucial part of this creation
process is to consult with your
• customers (to find out what they really
want)
• employees (to find out what they need
to achieve success)
48
Establishing measures
The critical areas of practice
• Define what measures mean the most to
your customers, stakeholders, and
employees
• Commit to initial change
• Use all available expertise
• Involve employees
49
Establishing measures
•
•
•
•
•
•
50
Make the system non-punitive
Bring in the unions
Provide clear guidance
Maintain flexibility
Limit the number of measures
Recognise that it is a living process
Discussion
• To what extent is the Balanced
Scorecard practically in operation in
your organisation?
51
Assessing organisation readiness
• Creating the Pull
Do key stakeholders understand the need and
feel motivated to implement an integrated
system?
• Supporting the People
Are company stakeholder goals (including
unions) aligned and on-board to enable
successful change?
• Managing the Process
Can you leverage project and programme
management tools to plan, execute and monitor
the implementation?
52
Assessing organisation readiness
• Please evaluate
your organisation’s
readiness to
implement a
performance
management
system. P13-15
53
State of readiness
• Scores of mostly 1's and 2's: Very low
readiness, high risk
• Scores of mostly 3's & 4's: Moderate
readiness, moderate risk
• Scores of mostly 5's & 6's: Strong
readiness, low risk
54
The performance management cycle
•
•
•
•
•
•
•
•
55
Exploration and budgeting
Reaching common understanding
Performance contracting
Development and planning
Renegotiate goals
Continuous communication
Performance tracking
Compensation and rewarding performance
Diagram 1: Performance Management Elements
Business Strategic Plan
Operating Plans and Role Clarifications
Team Planning and Role Clarification
Individual Goals
Day to day Management and Communication About Performance
Formal Performance Reviews
Efficient, Effective, Enduring Organisation
56
Figure 1: Performance Management Model
Three Year Performance Cycle
Balanced Score Card
(Critical Few for Each
Year)
Training for Managers
and Employees
1
Business Planning
(Strategic Priorities)
Second Review 4
for Performance
& Development
Update for
Team and
Individuals
5
Third Review
Individual
Appraisal
Discussion
6
Compensation
and Reward
Plans for
Individual
Performance
and
Development
Individual
Performance
Contracting
NEXT YEAR/S
PLANNING - EVALUATING - FEEDBACK - COACHING
57
2
First Review 3
Performance &
Development
Update for
Team and
Individuals
Discussion
• Internationally it is estimated that 95%
of staff are unaware of the
organisation’s strategic objectives
and/or can not relate to them in the
execution of their daily tasks. What is
the situation in your business?
58
Step1: balanced scorecard measures
• Starting point: gather information to create
measurable performance agreements –
team and individual
• Prerequisite: management information
–
–
–
–
–
59
Strategic plan
Strategic priorities
Balanced measures
Business and operations plan
Competency profiles
Step 2 A: Plans
INFORMATION
• Exploration of what the work group, as a
whole and each member within the work
group needs to know to perform at a level of
excellence determined in consultation with
external and/or internal customers
BUDGETING
• Writing a realistic budget forms a critical part
of the performance planning process
60
Step 2 B: Contracting
• Managers and employees meet as a group to
create a common understanding about the
performance requirements for the upcoming
performance period
• The next step begins with a manager
conducting a work expectation and
performance contracting session with the
team as a whole, and each employee
individually
61
Work expectation and contracting
• What the person in the work position currently
does
• How the work is done (processes used)
• What assistance is needed to perform the job
well (information, equipment, support)
• What the expected work outputs (performance
objectives) are
• What competencies (knowledge, skills and
style/attributes) are required for the job?
• What the process improvement and learning
goals for this job are
62
Guidelines for performance
contracting
• Define goals which consist of outputs, quality
criteria, and indicators (the what of
performance)
• Define competencies (the how of
performance)
• Create a development plan
• Renegotiate goals and competencies as
needed
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Goal characteristics
•
•
•
•
65
Measurable
Within one’s sphere of influence
Realistic
Observable
Criteria for selecting competencies
•
•
•
•
66
Support business’ values
Relate to objectives
Observable
Understandable
What constitutes superior
performance in your
organisation?
Please discuss
67
Superior performance
• Superior performance is customer driven
• Staff possess the attributes
(competencies) of
– passion
– imagination, persistence to
deliver service
– “exceeding expectations”
68
Superior performance
• Identify customer needs, delivering on
specification, taking personal accountability
when service falters
• Volunteer for tasks others consider beneath
their dignity which later turn out to be a
stealth opportunity
• Motivated by the intrinsic value of work and
are keen to receive remuneration based
largely on performance
69
Performance development planning
• Manager and employees conclude a
development plan to
– Assess skills and knowledge
– Acquire skills and knowledge
– Apply skills and knowledge
70
Figure 2: Development Plan
Learning Need
Competencies
No1
No2
No 3
etc
71
Development
Activities
Key Actions
By When
Status
Performance agreement
Manager and employees conclude a
performance agreement. It
• includes a summary of the performance
improvement, and personal development
goals
• indicates how goal attainment and
performance affect career advancement,
development opportunities and pay/merit
increases
72
Discussion
• If a similar performance agreement
exists in your organisation, is it
operational and regularly reviewed?
73
Renegotiation of agreement
Employee takes initiative to renegotiate when
• organisation or work unit priorities change
• external conditions change – this includes
budgetary, legislative and technology driven
change
• support expected from others does not occur
• unforeseen problems or opportunities arise
74
Step 2 (B2) Continuous
communication
• Ongoing performance communication is
the process by which managers and
employees work together to share
– information about work progress
– potential barriers and problems
– possible solutions to problems
75
Discussion
• How does performance management
shift the emphasis of managing and
supervising?
76
Step 2 (B3): Performance tracking
• Performance management is essentially
a business process whereby employees
and managers produce results for
customers
• All partners need to monitor their
business situation in order to take action
based on good information to keep
performance and development on
course or to change course if needed
77
78
Performance tracking
– Track outputs
– Track competency development
– Track work style
• Managers and employees commit to
undertake interim team and individual
performance reviews every 3 months
and an overall evaluation annually
79
Reviewing performance
• Prior to all review discussions both the
manager and each team member
complete the performance planning and
review documentation independently
• Formal group and/or 1:1 reviews must
occur every three months
• The final performance discussion is a
private 1:1 performance appraisal
between the manager and employee
only
80
Type and frequency of evaluation
• Individual performance appraisal needs to
occur preferably four times a year
• Team and individual review go hand in hand –
preferably four times a year
• Customer reviews refer to the regular and
formal reviews that customers are invited to
participate twice per performance period to
assess work unit and/or individual performance
81
Procedural support and fairness
• Review and appraisal checks and balances
must exist by means of sign-offs at a higher
level or an appeal process
• Consistency of ratings across work units must
be maintained
• Review and confirmation of ratings may occur
at least one level higher in the work unit
82
Administrative support and efficiency
to line management
• Training is essential to overcome the many forms
of appraiser bias and to develop the
interpersonal skills required to give and receive
candid feedback
• Instruments and forms are merely to be used as
recording devices for comments and ratings
• Electronic support systems need to be used
wherever possible to reduce the administrative
burden
83
Discussion
• Is a three-month review cycle feasible in
your business?
84
Compensating and reward
•
•
85
The company will follow a balanced
approach to paying for superior
performance in combination with
reaching superior development targets
It is supported by a structured wage
and benefits system that is market
related
Structure of reward system
• An effective compensation and reward
system can have a positive impact on
shaping desired work behaviours and
performance
• The goals of the pay system should be
to motivate teams and individuals to
make optimum use of their abilities,
skills and knowledge, and to attract and
retain high performing employees
86
Structure of reward system
•
•
•
•
Individual performance
Team performance
Organisation performance
Skill-based pay, gain sharing for savings
achieved combined with merit increases can
strengthen the link between pay and
performance
• The other side of the coin is recognition on an
ongoing and day-to-day basis
87
88
Competencies
A competency is a written description of
the knowledge, skills, abilities, motives,
drives and attitudes causally related to
effective performance of a job or
position within an organisation or
possessed by an individual
89
Competencies
• Organisational competencies: provide the basis
for creating a competitive advantage
• Individual competencies are those attributes
that each employee brings to the workplace for
his/her particular function
• Individual and team competencies are critical
components of the organisational
competencies
90
Competency framework
• A business should create a competency
framework to provide management and
staff with a common understanding of
the set of competencies and behaviours
that are vital to the organisation’s
success
91
Competency framework
92
Competency framework
• An effective method to assess, maintain, and
monitor the knowledge, skills, and attributes
of people in the organisation
• The framework allows for measuring current
competency levels to make sure staff
members have the expertise needed to add
value to the business.
• It also helps managers to make informed
decisions about talent recruitment, retention,
and succession strategies
93
Key performance indicators
KPI is a quantifiable metric that reflects
how well is an
• employee applying his or her current
skills, and to what extent is he or she
achieving the outcomes desired
• entire organisation achieving its stated
goals and objectives
94
Cascading KPIs
• Managers and employees need to define
KPIs for their teams
• The ideal situation is where KPIs cascade
from level to level in the organisation
• It helps staff work in such a way that their
activities are aligned with corporate strategy
95
KPI formulation context
• What is the vision for the future?
• What is the strategy? How will the strategic
vision be accomplished?
• What are the organisation's objectives? What
needs to be done to keep moving in the
strategic direction?
• What are the Critical Success Factors?
Where should the focus be to achieve the
vision?
96
Defining KPIs
• Which metrics will indicate that the correct
vision and strategy are being pursued?
• How many metrics should there be? (Enough,
but not too many!)
• How often should they be measured?
• Who is accountable for the metric?
• How complex should the metric be?
97
Defining KPIs
• What should be used as a benchmark?
• How is it ensured that the metrics reflect
strategic drivers for organisational success?
• How could the metrics be cheated, and what
will guard against this?
• What negative, perverse incentives would be
set up if this metric was used, and how will it
be prevented?
98
KPIs and reward
• In the process of establishing rewards
and recognition practices, it must be
ensured that rewards tie directly to the
KPIs
99
Examples of KPI measures
Please draft a list of KPIs for the position
you hold in your organisation
100
Discussion
• Designing KPIs and measures have
been highlighted as the most
challenging part of designing and
implementing a performance
management system. What is your
experience?
101
The need for a policy
• It communicates how performance
management will be used by managers and
employees as a business process
• It encourages and empowers managers and
employees to see performance as an
integrated real-time feature of work life
• It illustrates that performance management is
not a separate stand-alone process but
integrates with the organisation’s and work
units’ business, operational plans and budgets
102
Policy statements
• Study the 20 statements
• Mark those statements that you perceive to
be already operating in your organisation
• Out of a score of 20, judge the progress that
your organisation has been making towards
an integrated performance management
system
103
Figure 1: Performance Management Model
Three Year Performance Cycle
Balanced Score Card
(Critical Few for Each
Year)
Training for Managers
and Employees
1
Business Planning
(Strategic Priorities)
Second Review 4
for Performance
& Development
Update for
Team and
Individuals
5
Third Review
Individual
Appraisal
Discussion
6
Compensation
and Reward
Plans for
Individual
Performance
and
Development
Individual
Performance
Contracting
NEXT YEAR/S
PLANNING - EVALUATING - FEEDBACK - COACHING
104
2
First Review 3
Performance &
Development
Update for
Team and
Individuals
Performance contracting paperwork:
Goal setting
• Work unit outputs and job priorities
– Process
– Memo to staff
– Worksheet
105
Tracking results
• Performance management would be incomplete
without systematically tracking performance on a
regular basis
• The purpose of tracking and review is to
determine progress on the extent that the team
and individual are meeting the objectives of the
company and those they set for themselves
• The outcome of tracking and discussions with
their managers trigger a process of corrective
action should the employee be found to underperform
106
Corrective action
• This may include giving additional training,
providing resources such as computer
equipment, ensuring team integration, resolving
of conflict and other aspects which may have
hindered the staff member in doing his or her
daily work
• Vitally important, it also makes provision for
renegotiating the outputs and objectives.
Performance criteria are not cast in concrete
107
Discussion
• Doesn’t this approach provide an
opportunity for the employee to come
up with a list of excuses and shift the
blame for poor performance?
108
Tracking results
•
•
•
•
109
Process
Memo to staff
Worksheet: Evaluation of outputs (p43)
Worksheet: Performance planning for
next period (p44)
Performance improvement planning
• This type of plan is used to address performance
issues that have been identified by the manager
and/or employee and communicated in an
appraisal/performance-related memo or in
conversation
• Improvement planning
– Process
– Manager review
– Performance improvement plan (p47)
110
Career development plan
Written with the following objectives in mind:
• Growth in the current job. Expanding skills
and job satisfaction for employees who are at
the top of their career path or who do not
have a desire to move beyond their current
position
• Promotion and succession planning
111
Discussion
• This concept of career development
planning looks great on paper. But what
is the scope of CDP in an SMME?
112
Disciplinary action
• Every company needs standards rules and
regulations to ensure smooth operation
• If these rules are not upheld, it is important
that a disciplinary procedure be in place to
deal with the situation
• Employees should have access to
procedures whereby alleged failures to
comply with these standards may be fairly
and sensitively addressed
113
Dismissal: Competence
• Incompetence must relate to the kind of work
the employee was required to do
• Where targets and performance goals have
been identified by the employer and clearly
communicated to the employee, such targets
and goals must be reasonable
• Once the company offers the employee all
necessary assistance to achieve the targets
then a continued failure by the employee
would constitute good grounds for a dismissal
114
Dismissal: Competence
• The employer must provide adequate
assistance, resources and training
• Where an employee has been informed that
his/her work is not of an acceptable standard,
he/she must be given reasonable time within
which to improve
• The work environment must also be
conducive to such improvements
115
Dismissal: Qualifications
• When an employee does not have the
required competence or qualifications to
perform the work for which he/she was
employed, a dismissal may be deemed fair
• This is especially so where the competence
or qualifications are required for safety
reasons
• Where a dismissal is due to alleged
incompetence an employer will be expected
to have provided assistance to the employee
116
Dismissal: Qualifications
• Equally, when an employer is in business to
provide professional services such as
Accountants, Solicitors, Doctors, etc.,
qualified personnel are a legal prerequisite
• Dismissal would be based on grounds that
they did not hold the qualifications claimed
while they are essential requirements to job
performance
117
Dismissal:
Qualifications
• Should an employer hire an employee on the
basis that he/she will obtain a certain
qualification and this is not achieved within a
reasonable time period, the employee could
be fairly dismissed
• If an employer dismisses an employee for
lack of appropriate qualifications or
incompetence, then it will need to show that a
particular qualification or standard is essential
to the job
118
Dismissal: Capacity
•
•
•
•
119
Frequent short term absences can be justified
as reasons for dismissal where:
The absences occurred over a significant
period
There was reason to conclude that this pattern
would not improve in the foreseeable future
Allowing the absences to continue was
unacceptable as it established the wrong
precedent for other employees
Appropriate disciplinary action had been taken:
i.e. warnings
Dismissal: Capacity
• In the case of absence as a result of alcohol or
substance abuse, the employer should in the first
instance treat these as it would an illness
• The employer should make every effort to elicit
the cause and refer the employee to the
appropriate treatment facility to try and combat
the dependence
• If the absences continue after treatment, or if the
employee refuses to seek help, the usual
Disciplinary Procedure should be used
• If the problem persists, it may result in dismissal
120
Dismissal: capacity
• Lengthy absences
due to illness, with
no foreseeable
return to work can
justify a dismissal
on grounds of
incapacity
121
Discussion
• It is becoming increasingly difficult to
dismiss non-performing staff in our
labour law dispensation. Yet, would you
agree that dismissal due to nonperformance is a neglected option in
performance management?
122
Corrective action: Documentation
•
•
•
•
123
Verbal warning
Informal (written) warning
Formal warning
Final warning
Discussion
• The warning process appears to take an
extensive period of time. What
challenge does this present to an
SMME?
124
360 degrees feedback
• 360 degree feedback is a method and a tool
that provides each employee the opportunity
to receive performance feedback from his or
her supervisor and four to eight peers,
reporting staff members, co-workers and
customers
• Most 360 degree feedback tools are also
responded to by each individual in a self
assessment
125
126
360 degrees feedback
• The most effective 360 degree feedback
processes provide feedback that is based on
behaviours that other employees can see
• The purpose of the 360 degree feedback is to
assist each individual to understand his or her
strengths and weaknesses, and to contribute
insights into aspects of his or her work
needing professional development
127
Positive factors
• Improved feedback from more sources
• Team development
• Personal and organisational performance
development
• Responsibility for career development
• Reduced discrimination risk
• Improved customer service
• Training needs assessment
128
Negative factors
•
•
•
•
•
•
129
Inadequate design process
Failure to connect the process
Insufficient Information
Focus on negatives and weaknesses
Rater inexperience and ineffectiveness
Paperwork/computer data entry overload
Discussion
• The trend towards 360 degree feedback
is becoming increasingly prevalent.
How practical is this process in an
SMME?
130
Reward and remuneration
Reward and recognition of performance are the
single most powerful instruments
management has with which to change,
establish and reinforce those outputs and
behaviours of employees through which
strategic business objectives and results are
achieved
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Reward strategy
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Reward strategy
• The key is not money itself
• Rather, it is viewing money and all forms of
reward as the language of the business: it is
the use of reward in all forms to communicate
what is important in terms of high
performance
• The more visibly this is demonstrated, the
more effective the communication
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Benefits of pay for performance
• Goal alignment
– Employees more productive
– Shared responsibility
– Managers constantly staying in touch with staff
• Increased motivation
– Employees energised to perform at maximum
– Increased recognition
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Benefits of pay for performance
• Improved retention
– Recognising top performers
– Increase as high as 27%
– Employees empowered to
be in control of their financial situation
• Cost savings
– Avoiding over compensation
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Questions for setting expectations
• Are the tasks that people are working on driving the
business? How can you tell?
• Are managers engaged with their employees
throughout the year to make sure they execute
their objectives?
• Are individuals executing against what is
expected? Who is and who isn’t executing?
• Are managers objectively ensuring that bonuses,
raises, and promotions are given to those high
performing individuals that they can't afford to lose?
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Gauging attitude of employees
Employees have to:
• Desire higher pay
• Have the skills and capabilities to
improve performance
• Trust the company to administer the
plan fairly and pay if they improve
performance
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Discussion
• What is the scope for pay-forperformance in your
profession/organisation?
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Remuneration model
Job value
• the relative worth of various jobs within
an organisation is determined
objectively, and jobs are ranked so as to
make it possible to achieve internal and
external parity, by applying a
recognised job evaluation system
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Remuneration model
Market value
• Comparisons with specific markets are
continuously drawn to establish a
realistic and competitive price for labour
• A strategic decision is made with regard
to the position the organisation wishes
to occupy in respect of the market
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Remuneration model
Individual value
• The worth of each employee must be
determined within the specific job as well as
comparitive jobs
• The worth of an employee determined by
– Constant high performance and estimated
potential
– Market premium for scarce skills
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Performance communication
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Performance communication
Performance communication refers to
• direct, shared responsibility
• output focused communication in the
workplace
• communication that is open, above
board, honest, respectful and deliberate
143
Performance communication
Performance communication occurs when
• the managers and employees commit to
and take responsibility for working out
performance problems together and
understanding each other
• use good communication skills through
purposeful discussion
144
Principles of performance
communication
• Don’t wait to be asked
• Performance communication is a two way street
• Judgment calls
• Performance communication is a
human process
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Performance reviews
• Performance reviews and feedback
discussions are an intense form of
communication
• On the one hand, managers need to
communicate conclusions about performance
• The employee, on the other hand, wants to
know where he/she stands
• Employees need to listen, clarify the feedback
and then make a commitment to appropriate
actions
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Organise your thoughts
• As a feedback GIVER, structure your feedback so
that it answers the following questions. As a feedback
RECEIVER, listen for the following information:
– What did the feedback giver observe in the
situation that prompted a decision to give some
feedback?
– Why is this information important for the receiver to
know?
– What does the feedback giver think would improve
the situation in the future?
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Keep the human touch
• Feedback is always a partially
subjective process that can't be
automated, or substituted by a form or a
computer
• In order to work, feedback
communication must involve judgment,
questioning, empathy, and personal
commitment
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Keep the human touch
• It is important to be as objective as possible
when trying to describe and assess performance
• A high level of trust must
exist between managers
and employees
• Both must talk about their
concerns, opinions, and reactions
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Focus on outputs
• Discussing and evaluating performance is a
complex task because the things that
individuals do from day-to-day have both
short- and long-term implications
• This means you must discuss not only what
the employee has accomplished, but also
how the accomplishments were achieved and
what impact they had
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Focus on outputs
• It also means discussing the knowledge
and skills the employee used, or should
have used, in situations where his/her
competencies were key factors
• Focus performance reviews on the
three dimensions of performance:
outputs, competencies, and style
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Delivering and digesting tough
messages
• The hardest part of the job: delivering and
digesting messages about performance
problems or other issues that could lead to
termination or other serious consequences
if not addressed
153
Delivering and digesting tough
messages
• Tough messages must be delivered and
digested directly, clearly, and immediately
• Addressing performance problems is a key
part of a manager's role
• A manager's failure to confront employee
performance is in itself a performance
problem
154
Focus on solving the problem
155
Focus on solving the problem
• Even when performance problems appear to be
related to style, it is unrealistic to make broad,
unsubstantiated negative statements about an
individual and hope that improvement will occur
• The feedback you give and statements you
make about the performance problem must be
firm, fair and strong
• This is especially true when the problem is very
serious and when major changes must be
made in a short time
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Focus on solving the problem
• When feedback contains a tough message, it
is especially important that it be focused on
the problem and be specific and well
substantiated
• It is the responsibility of the discussion initiator
to establish the initial focus of the discussion
• Both manager and employee must work
together to assure the results will be
constructive
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Obtain a commitment
• It is the employee's job to plan and
implement actions for improvement and
development.
• The employee's commitment to action
and ability to act are key to solving the
problem
158
Potential challenges of
implementation
•
•
•
•
•
159
Lack of buy–in from CEO
Line management inertia
Alignment of goals
Defining KPIs and measures
Defining competencies
Potential challenges of
implementation
•
•
•
•
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Over-ambitious system design
Alienation
Pay for performance
SMME take on
Trends in performance management
• In the public sector the implementation of a
performance management system is
mandatory
• In the private sector it is gaining insight into
employee performance
• Technology vendors continue to develop
systems that integrate several management
information sub-systems into a seamless
performance management system
161
Performance management
technology solutions
•
•
•
•
162
Improving efficiency and compliance
Making performance reviews relevant
Maximising productivity
Paying for performance
Improving administrative efficiency
and reducing risk
•
•
•
•
•
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Reducing errors
Saving a manager’s time
Consistency
Creating a paper trail
Providing writing assistance
Making performance reviews
relevant
• Metrics-based performance evaluation
– Giving both employees and managers
needed insight
– Automating goal tracking and reporting
– Driving accountability at all levels
• Development plans
• Learning opportunities
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Maximising productivity and paying
for performance
• Paying the people who are driving
success
• Minimising salary misallocation and
misunderstandings
• Identifying talent gaps
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Web resources
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•
•
•
•
•
•
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www.kpilibrary.com
www.staceybarr.com
www.sucessfactors.com
www.aberdeen.com
www.sumtotalsystems.com
www.halogensoftware.com
www.cornerstoneondemand.com
Thank you
Cor Faling
[email protected]
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