The Essence of Performance Management

Performance management defined

Performance management is a continuous process of improving organizational performance by: • aligning individual and organizational goals; • planning performance to achieve the goals; • reviewing and assessing progress; and • developing people.

Performance management is managing the business.

What organizations can expect to get out of performance management

The opportunity to: • integrate individual, team and corporate objectives; • guide individual and team effort to meeting overall business needs; • motivate and engage employees; • recognize individual contribution; • plan individual careers; • introduce relevant and effective learning and development programmes to meet identified needs.

What managers can expect to gain from performance management

Managers will be able to: • take steps which will deliver improved performance in their department; • clarify expectations with the individual members of their teams; • have ‘quality time’ with their staff to discuss matters affecting work, performance and development away from the hurly-burly of everyday working life; • provide better feedback to individuals about their performance and progress based on a mutual understanding of needs; • identify areas of individual concern and provide guidance to enable individuals to make the best use of their abilities; • build closer working relationships based on mutual trust and respect; • identify individual training and development needs.

What employees can expect to gain from performance management

Employees will: • know what is expected of them; • know how they stand; • know what they need to do to reach their goals; • be able to discuss with their manager their present job, their development and training needs and their future.

Performance management objectives e-reward survey 2014

Improve organisational performance 33% Align individual and organizational objectives 22% Develop a performance culture 17% Improve individual performance 14% 6% Align individual behaviour to organizational values 3% 3% Basis for personal development Inform pay decisions 21%

‘Performance management is what managers do: a natural process of management.’

Performance management – practitioners’ principles

‘A management tool which helps managers to manage.’ ‘It’s about how we manage people – it’s not a system.’ ‘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.’ ‘Based on accepted principles but operates flexibly.’ ‘Focus on development not pay.’ ‘Success depends on what the organization is and needs to be in its performance culture.’

Principles of performance management

• Have clear aims and measurable success criteria.

• Be designed and implemented with appropriate employee involvement.

• Be simple to understand and operate.

• Have its effective use core to all management goals.

• Allow employees a clear ‘line of sight’ between their performance goals and those of the organization.

• Focus on role clarity and performance improvement.

• Be closely allied to a clear and adequately resourced training and development infrastructure.

• Make crystal clear the purpose of any direct link to reward and build in proper equity and transparency safeguards.

• Be regularly and openly reviewed against success criteria.

Source: Strebler, M T, Bevan, S and Robertson D (2001) Performance Review: Balancing objectives and content, Institute for Employment Studies, Brighton

Ethical principles of performance management

1.Respect for the individual 2.Mutual respect 3.Procedural fairness 4.Transparency

Source: Winstanley, D and Stuart-Smith, K (1996) Policing performance: the ethics of performance management, Personnel Review, 25 (6), pp 66

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The performance management cycle

Strategic goals of the organization Plan Performance agreement:

• role profile and key result areas • key performance inidcators • performance goals • competencies • performance improvement • personal development

Review Performance

• dialogue and feedback • agree strengths and any areas for improvement • build on strengths – ‘you are particularly strong in this area’ – how can you make even greater use of them?

Act

• carry out role • implement performance improvement plan • implement personal development plan

Monitor Ongoing performance management

• track performance • provide continuous feedback • provide coaching • deal with under-performers

Summary of performance management activities over the year

Start of year Continuing dialogue Performance agreement Managing performance throughout the year • Define role profile, updating as necessary • Ensure that role profiles set out updated key result areas and competency requirements • Define goals and standards of performance • Identify and define key performance indicators • Draw up performance development plans • Draw up personal improvement plans • Monitor progress and review evidence of achievements • Provide informal feedback as required • Provide coaching as required • Update role profiles and goals as necessary End of year Performance review • Prepare for performance review by analysing achievements (work and learning) against goals and plans • Identify specific strengths and weaknesses on the basis of evidence • Assess overall performance • Provide feedback • Use conclusions of performance review as the basis for next year’s performance agreement

Performance agreements

A performance agreement is a summary of the joint decisions made during the planning stage of performance management. It covers: • key result areas as defined in a role profile • goals expressed as targets or performance standards • performance development plans • personal development plans

The significance of a performance agreement

A performance agreement is used as a reference point when planning and reviewing performance and is therefore a key component of a performance management system.

Role profile defined

A role profile describes the key characteristics of a role – the part played by individuals in fulfilling their work requirements. It specifies:

The overall purpose of the role –

what the role exists to achieve.

Key result areas

– the elements of a role (no more than five or six) for which clear outputs and standards exist, each of which makes a significant contribution to achieving its overall purpose.

Knowledge, skill and ability requirements (KSAs)

– these express what the role holder needs to know and be able to do.

Behavioural competency requirements

– the types of behaviour required for successful performance of the role.

Basic role profile

While it is best to use a comprehensive profile as described in the last slide to provide a complete basis for a performance agreement, for the sake of simplicity some organizations use just a basic role profile.

This limits the profile to a list of the role’s key result areas for which performance goals in the shape of targets or standards can be set.

Use of a role profile

A full role profile provides the basis for setting goals and therefore for planning, monitoring and reviewing performance. Additionally, and usefully, it provides information which is used to prepare performance development and personal development plans. A basic role profile provides a more limited but still important framework for setting performance goals.

Developing a role profile

Questions to be answered

1.

2.

3.

4.

5.

6.

7.

8.

What is the overall purpose of the role?

How does the role contribute to the achievement of the organization’s strategic goals?

What are the key result areas in the role which define what has to be achieved – no more than five or six. What will indicate how well the role holder has performed in each key result area (the key performance indicators)?

How are the key result areas aligned to the key result areas of the organization?

What is the role holder expected to know to be able to carry out the role?

What skills are needed to carry out the role?

By reference to the headings in the organizational competency framework, what behavioural competencies are required for successful role performance?

Key performance indicators (KPIs)

The metrics or other sources of information which are used to indicate how results can be measured.

KPIs answer the question: ‘How will we know when the results specified in this area have been achieved?’ They are referred to when setting performance goals (there is no point in an unmeasurable goal) and assessing performance by reference to those goals.

Defining key performance indicators

Answer the question for each key result area: ‘How will we know when the results specified in this area have been achieved?’

KPIs defined as metrics

Wherever possible a KPI should be a quantified measure expressed as a performance metric. For example: • performance records eg sales, output, costs, wastage etc; • statistics eg speed of response, number of complaints, employee turnover, health and safety; • quality of performance – accuracy, timeliness; • customer (external and internal) feedback from survey results; • level of employee engagement from survey results.

If this is absolutely impossible, the KPI will have to refer to a qualitative statement.

Qualitative KPIS

If it is absolutely impossible to identify a metric as a KPI a qualitative statement has to be used which answers the question ‘How do we know when this task has been well done?’ by reference to evidence of behaviour in a key result area. For example: • If a key result area for a call centre agent is ‘Deal with customer queries and complaints’, the KPI could be a sample of recorded conversations with customers to establish the extent to which responses were helpful and polite.

• If a key result area for a management accountant is ‘Help managers with advice on their budgetary control responsibilities, the KPI could be expressed as ‘evidence is obtainable that the advice is sound and readily available’.

Example of key performance indicators for a production manager

• Production output and throughput records.

• Records of productivity in terms of output per person and costs in terms of cost per unit of output.

• Information showing that production schedules and plans are realistic and implemented effectively.

• Quality control reports showing results against standards and targets.

• Safety records showing frequency rate of accidents • Results of employee engagement surveys.

The performance goal setting sequence

Key result areas Key performance indicators Performance goals

Rationale for defining knowledge and skill requirements

• A definition of the knowledge and skill requirements for a role will provide an important platform for developing performance. • Understanding them will enable managers and individuals to identify any personal development needs and any gaps or deficiencies which are affecting performance. • This provides a basis for setting learning goals and for development planning.

Defining knowledge and skill requirements

Knowledge and skills requirements are defined by answering two questions: 1. What does the role holder

need to know

to perform this role well?

2. What should the role holder

be able to do to

perform this role well?

Identifying knowledge, skills and ability requirements

Take each key result area in turn and obtain answers to the following questions: 1

What do you have to know to achieve the results expected in this area

? • • • • • • The areas to be covered are knowledge of: administrative and operational procedures; facts and other relevant information; systems of work including technical and administrative processes; management principles and techniques; scientific, technical or professional subjects or matters relevant to the role the business – its operations and how it makes money.

2 What do you have to be able to do to carry out this aspect of the role?

• • • • • • • • • • The skills areas to be covered are: leading and motivating people; working with colleagues (team-working); dealing with customers and clients; planning and prioritizing; problem solving and decision making; analytical and critical thinking; interpreting data; handling processes or procedures; communicating – writing or speaking; physical (manual) skills.

Behavioural competencies

• Behavioural competencies are measurable aspects of a person’s behaviour that result in effective or superior performance. • They may be generally applicable as defined in an organization’s competency framework.

• Or they may be specially defined for an individual role, referring to the headings of the framework, if there is one

The rationale for defining behavioural competencies

The definition of the behavioural competency requirements for a role is useful because it provides the basis for: • helping people to appreciate what behaviour is expected of them; • analyzing the reasons for any behavioural issues to guide agreement on a development plan.

Identifying behavioural competency requirements

Take each key result area in turn and obtain an answer to the following question: ‘What sort of behaviour is likely to lead to effective performance in this area?’ The headings under which behaviour could be analysed will be found in an organization’s competency framework, if it has one. If not, reference could be made to the typical list of headings set out in the next slide.

Behavioural competency headings

The following are typical behavioural competency headings in alphabetical order: • Achievement/results orientation • Business awareness • Communication • Customer focus • Developing others • Flexibility • Leadership • Planning • Problem solving • Teamwork

Development plans

• Spell out what employees, in conjunction as necessary with their managers, need to do in specified areas of their jobs.

• In any development area goals are set on what has to be done and agreement reached on how the expected results will be achieved. • If there are any behavioural performance problems plans are agreed on how the problems can be overcome.

Nature of a development plan

A development plan provides a framework which, as necessary, enables people: • To extend their knowledge of the techniques, systems, processes, procedures and tools they need to carry out their role.

• To build on existing skills or develop any new skills needed to perform well in their role.

• To refine behaviours in order to meet the behavioural competency requirements of the role.

• Acquire different experiences which will help to develop knowledge, skills and potential.

Characteristics of a development plan

A development plan should: • focus on fundamental development needs; • be achievable within a defined time scale; • be limited to three or four development areas in order to achieve the two requirement set out above; • be agreed by individuals with their line manager; • be based on analyses by both the manager and the individual prior to any formal meeting to define and agree development needs (this could be the mid- or end-year performance review meeting or, better, a specially convened development meeting following the performance review); • set out a clear action plan specifying responsibility – individuals on their own but with access to learning resources and help and guidance as required from their manager, or the manager through coaching or the selection of appropriate learning experiences; • be monitored; • be updated and revised whenever necessary during the year rather than waiting for a mid or end-year meeting.

Development planning: points for consideration by an employee when preparing for a development planning meeting

• What do I want to achieve this year and longer term? • What are my greatest strengths and how can I build on them? • Are there any aspects of my work in which I feel I am not performing as well as I could? • If so, is the problem insufficient knowledge, skill or experience or what?

• Do I think I can learn all I need on the job?

• If so, is there any way in which I can be helped to learn?

• Could l benefit from additional experience within my department or elsewhere?

• Could I benefit from any formal training, within or outside the organization?

• If so, what sort of training?

• What are my three most pressing development needs?

Development planning: points for consideration by a manager when preparing for a development planning meeting

On the basis of what I know and have observed about the employee’s performance: • Are there any areas of knowledge about the techniques, systems, processes, procedures or tools required which need to be developed or extended?

• Are there any skills demanded by the role which need to be developed or acquired?

• Is there any evidence that changes in behaviour are desirable in such areas as leadership, team working or relationships with internal or external customers?

• In the light of the above, what are the three most important areas for development which need to be included in a development plan?

• What type of development would be appropriate? Select the action required from methods such as: coaching, self-managed learning using learning resources such as e-learning, mentoring or formal training.

Example of development plan

Agreed development plan for: James Booth Role: Assistant management accountant

Area for development Note the three most important areas for the development of knowledge, skills or behaviour

Knowledge: Needs to know more about zero-based budgeting Skills: Needs to develop skills in presenting budgetary control information to managers Competencies: Needs to develop leadership competencies

Method of development Indicate what method of development should be used eg coaching, self managed learning using learning resources such as e-learning, mentoring, formal training

Three-day course run by Camden metropolitan University Coaching by Management Accountant Attend next company three-day leadership development course

Timing Indicate when the development activity should take place

June 5 next year By end February next year January 15 next year

Review Progress in completing the development plan in each area

Personal development plans

Learning action plans to achieve learning objectives for which individuals are responsible with the support of their managers and the organization.

Requirements for successful performance management

•The commitment, encouragement and support of senior management.

•The involvement of line managers and employees in developing the scheme.

• The quality of communications, training, guidance and advice provided to line managers and individuals.

• The commitment and skill of line managers.

• The acceptance by employees that performance management is fair and helpful.

•The rigour with which the organization evaluates the effectiveness of performance management. • The determination of the organization to put things right, often through training.

Performance management at Astra Zeneca Stages

1.

2.

3.

4.

Business role clarification

objectives.

–

clear statement of agreed role and

Performance planning

performance.

–

agreement of targets to achieve the ‘plan-do evaluate’ elements of managing

Performance development

skills required and prepare individual development plan.

–

agree

Performance measurement

ongoing feedback and an annual summary of an employee’s

–

provide performance (no overall ratings).

Basic design principles – Civil Service performance management report

• Stretching objectives agreed at the beginning of the year.

• Individuals know the competencies and behaviours they are expected to demonstrate.

• Regular discussions during year between individuals and their managers to discuss progress.

• Formal meeting at the end of the year to record whether objectives have been achieved and levels of competence demonstrated.

• Line managers make a narrative assessment but do not translate this into a box mark.

What makes for good performance management: Scottish Parliament

• New staff know what is expected of them from the outset.

• Everyone is clear about corporate goals and works towards them.

• Objectives are SMART.

• A system exists to accommodate day-to-day performance feedback.

• Evidence is available to support assessments.

• The personal development plan is used to help self developmental activities or improve performance.

• The line manager provides and the jobholder undertakes the training needed to support the individual and the organization.

• Appropriate support is in pace to eliminate poor performance.

Thames Valley Police performance and development review process

• Key to the performance management strategy.

• Establishes strong employment relationships.

• Provides a route to individual, team and organizational performance planning.

• Secures future training and development provision.

• Creates more visibility for career paths, competencies and behaviours across ranks and roles.

Unilever The leader’s mindset

• • • • • • I have to communicate my

performance expectations

with my employees.

Fairness and honesty

impacts behaviour and performance.

Focus on

utilizing strengths

to the maximum and closing gaps.

The employee needs to take

ownership

for his/her development with my support.

It is my role to support by coaching, mentoring, leading, managing

conversations.

I have to

differentiate

among people in my assessment and coaching.