Friday, May 19, 2006

Performance Assessment: Concepts, Design & Implementation

What is performance management?
Measuring employee performance has come a long way from the annual performance appraisal to an on-going performance management process. In the past, managers and employees met once a year for the annual performance appraisal (review) to look back at the work done during the previous year and to evaluate what was accomplished. Human resources managers, managers/ supervisors and employees have come to realize that only looking back does little to improve performance. In recent years, there has been a shift away from performance appraisals to a more comprehensive approach called performance management.
Performance management is an ongoing process where the manager/supervisor and employee work together to plan, monitor, and review an employee's work objectives or goals and overall contribution to the organization.
Performance management starts with a work plan that identifies for the employee what is to be accomplished and how. The plan is followed up with informal, on-going monitoring and feedback on his/her progress towards the objectives set in the plan. At the end of the performance period - usually a year - the supervisor and employee meet to summarize the accomplishments and challenges of the past year and document the discussion using a performance management form.
What is the purpose of performance management?
The purposes of performance management include
  • Organizational Effectiveness

  • Ensure that work plans of the employee are directed towards or support the strategic direction of the organization

  • Motivate employees to do their best

  • Performance Improvement

  • Establish clear communication between the manager and the employee about what s/he is expected to accomplish

  • Provide on-going, constructive feedback on performance

  • Identify areas of poor performance

  • Establish plans for improving performance, as necessary

  • Identification of Strengths

  • Identify the skills and abilities of each employee so that work assignments build on and reflect an employee's strengths

  • Identify individual employees for more challenging work

  • Training and Development

  • Assist and support staff in achieving their work and career goals by identifying training needs and development opportunities

  • Administrative Decisions

  • Support decision-making about promotions, terminations, compensation and rewards.

  • Legal Documentation

  • Provide a paper trail for legal challenges related to dismissal or vicarious liability.
2. Is Your Organization Ready for Performance Management?
Organizational Readiness
Before you develop a performance management process, other human resources management practices should be in place to support the process, including:

  1. well designed jobs

  2. written job descriptions

  3. comprehensive orientation

  4. effective training

  5. effective supervision

  6. a positive work environment
If you do not have these human resource management practices in place then the first step for your organization will be to develop them before you establish a performance management process. Without the necessary human resource management practices in place, a performance management process at best will achieve modest improvements in performance and at worst may result in decreases in performance.
The performance management process must have the support of the Board, Executive Director and other senior managers. The establishment of a good performance management process requires time and resources.
Examples of management support for performance management include:

  1. giving top performers more challenging/enriching work;

  2. making money available for training and other types of development;

  3. demonstrating commitment to deal with poor performance.
Management support to act upon the outcomes of the performance management process is also necessary. It is essential that:

  1. good performance is recognized

  2. inadequate performance results in the necessary support and/or training to improve performance

  3. consistently poor performance results in a change of responsibilities or termination, as appropriate.
If your organization will not act upon the outcomes of a performance management process, then there may be little point in establishing the process in the first place.

Organizational Fit
A good performance management system must fit the strategic direction and culture of your organization. Following are guiding principles that are consistently found in effective performance management systems and that you should adapt for your organization:

  1. Performance management links the goals of the individual employee to the goals of the organization.

  2. The employee and supervisor collaborate to set goals and review performance.

  3. Performance management is an on-going process; it is not a once a year appraisal.

  4. The performance management process is forward looking; past performance is summarized and future goals are set.

  5. The process is based on two-way communication between the employee and supervisor.

  6. The process monitors and measures result (what) and behaviour (how). The process does not evaluate personal traits, such as initiative - these are too subjective.

  7. The manager provides both positive feedback for a job well done and constructive feedback when improvement is needed.

  8. Training and development opportunities are provided for improving performance.
3. Designing a Performance Management System for Your Organization
The design of a performance management system requires you to think about the features that would make performance management effective in your workplace. The goal is to design a performance management process that provides an accurate picture of each employee's accomplishments.
Your performance management system should be:

  1. job-related

  2. practical

  3. have measurable standards
Perhaps the most important design consideration is to develop a process that is practical and easy to understand and use. The focus should be on the results of the performance management process - effective and motivated staff - not the steps of the process.

When developing a new performance management process, use a committee made up of employees and managers. A collaborative approach will increase employee buy-in, understanding and support of the process.

Once the process has been developed, communicate with all staff about the purpose and the steps in the performance management process.
You should be prepared to make adjustments to your new system as necessary.

Different Types of Performance Management Systems
There are a variety of ways to measure performance including:

  1. Self Appraisal: the employee is asked to evaluate his/her own work

  2. Peer Appraisal: staff of equal rank within the organization are asked to evaluate the employee

  3. Team Appraisal: similar to peer appraisals; employees who work as part of a team are asked to evaluate the team's work

  4. Assessment Centre: the employee is assessed by professional assessors using several types of evaluation such as work simulations and actual activites

  5. 360-Degree or Full Circle Appraisal: the employee's work is reviewed by gathering input from representatives of all the groups the employee interacts with such as supervisor, peers, subordinates and clients.

  6. Management-by-Objectives: the employee's achievement of work objectives that are set in collaboration with his/her supervisor are assessed.

  7. Combination of Methods: Some organizations combine different methods into their performance management process. In particular some organizations include an evaluation of competencies - the knowledge, skills and abilities that distinguish superior performance. Establishing competencies for performance management in an organization requires careful thought. Without careful preparation, evaluating competencies can be very subjective.
In the voluntary sector, 360-degree appraisals are sometimes used for evaluating the Executive Director. Management-by-objectives is an effective approach to performance management for all other employees.
Because it's the most practical system for most non-profit organizations, we will be focusing in this section of the website on Management-by-Objectives.

Performance management using a management-by-objectives (results-based) approach has three phases:

Phase 1 - Planning
  1. a work plan for the next year is developed;

  2. measures for assessing progress are established.
Phase 2 - Monitoring

  1. progress toward the goals identified in the work plan is monitored;

  2. the plan is adjusted if required;

  3. corrective action is taken if necessary.
Phase 3 - Reviewing

  1. at the end of the performance management cycle the manager and employee meet to document the work of the past year;

  2. accomplishments and shortfalls relative to the work plan are summarized using a performance management form;

  3. a new performance management cycle begins.
Each of these phases is discussed in detail in the section below.

4. Doing Performance Management: The Three Phases

If you have just designed a new performance management process for your organization or if you've made changes to an existing process, you will need to hold information sessions with all staff about the new system before implementing it. This will increase employee buy-in into the process and avoid resentment and confusion.

Performance Management - Three Phases

Phase 1 - The Planning Phase
Effective organizations plan their work in advance. Therefore, the first phase in the performance review process is for employees, in collaboration with their managers, to develop work plans for the coming year. The work plan should include:
  1. what is to be accomplished - results that are expected

  2. how it is to be done

  3. measures or standards that will be used
Establishing Performance Objectives and Measures
Often the most difficult part of a planning meeting is finding appropriate and clear language to describe the performance objectives and their measures/ indicators of success.

For example:
What is a valid measure of good customer service?
If the measure used only looks at the number of clients served (i.e. what was done), then the quality of service or 'how well it was done' is not captured. Assessing both 'what' and 'how' would be a more valid measure for good customer service. For example, in addition to the number of clients served, the quality of the information provided, and a complaints rate of 1% or less could represent good customer service.
To assess quality of information provided, the supervisor could do spot checks to listen to or look at the information that the employee provides to clients. The supervisor would then assess accuracy and completeness of the information.

The objectives and the indicators need to be SMART: Specific, Measurable, Attainable, Realistic, Timebound.
  1. SpecificThe objectives should specify clearly what is to be done, when it is to be done, who is to accomplish it, and how much is to be accomplished.In addition to "Specific," the 'S' sometimes stands fo "Stretch." This means that the objective is challenging yet doable.

  2. MeasurableAsk questions such as: How much? How many? How will I know when it is accomplished?The measures used to evaluate the objectives should be valid - they should actually measure the things you are trying to measure.Multiple measures should be used if possible, for example quantity, quality, timeframe and cost.

  3. AttainableAn attainable objective is one for which you see a reasonable path to achievement, and feasible odds that you will get there.

  4. RealisticThe objective needs to be possible to achieve. It should match the level of complexity with the employee's experience and capability.There needs to be an assessment that there are not insurmoutable forces outside the control of the employee that will hinder its accomplishment.

  5. Time-boundYou should be clear about the timeframe in which performance objectives are to be achieved. Normally, objectives are drafted to be completed by the end of the performance review period (usually one year).
Writing objectives and identifying the appropriate measures takes careful consideration.
One format to use for writing objectives is:

  1. Action verb + Object of the action verb + Measures

  2. Write an objective for each accomplishment; don't put multiple elements in one objective

  3. Use positive terms for behavioral objectives rather than stating the objective as what should be avoided
For some objectives, identifying appropriate measures can be challenging.

For Example:
For an employee who is responsible for supervising volunteers at a drop-in centre for youth.
SMART Objective 1: Conduct monitoring visits to the drop-in centre on a monthly basis to assess the performance of the five volunteers against the plans and objectives that were developed with them.
SMART Objective 2: Provide written updates on the work of the volunteers to the Program Manager on a quarterly basis.
Not SMART: Visit the drop-in centre and see how the volunteers are doing.
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Make sure that the objectives are a good representation of the full range of duties carried out by the employee, especially those everyday tasks that can take time but are often overlooked as significant accomplishments. If it does not cover the most important duties then the resulting evaluation will not be valid. Consider identifying critical objectives. These are objectives that are critical to the overall success of the position. If the employee does not meet his/her critical objectives then overall performance will be evaluated as unsatisfactory. The employee should have a written copy of the performance objectives and the measures/standards that will be used to assess performance.

CHECKLIST: The Planning Phase
  1. Set up a meeting to discuss the work plan. Make sure to set aside sufficient time and arrange to not be interrupted

  2. Explain the purpose of performance planning, the purpose of the meeting and how you propose to proceed

  3. Review the organization's goals and objectives and the strategic plan (if it exists)

  4. Look at the employee's existing job description to determine if it's still accurate and reflects the reality of the employee's job. Discuss and make changes as required.

  5. Review the employee's work plan for the year and assess the linkages between it and the organization's goals and objectives and the strategic plan.

  6. From the work plan or the job description, jointly identify 3-5 areas in which you will set performance objectives for the year. The choice of areas may be determined by the organization's strategic plan, by the employee's desire to improve outcomes in a certain part of their job or by a need to emphasize a particular part of the job at this time.

  7. Prepare a draft of the performance objectives and come to agreement as to the what success for each performance objective will look like (performance indicators)

  8. Identify learning objectives that will help the employee grow in their skills, knowledge and competencies. These objectives can help the employee accomplish their work goals or can be part of a longer term plan to develop their careers.

  9. Discuss the supports available for their learning objectives. These could include courses, workshops or other forms of training but it can also include in-house resources such as coaching or mentoring. For more training and development ideas,

  10. Ask the employee if s/he sees any barriers to accomplishing these objectives or their day to day work and, if so, what needs to be done to overcome them.

  11. Ask the employee to finalize the performance objectives and the indicators as well as the learning objectives in a form provided and make an appointment for a follow up meeting to sign off on the plan.
Phase 2 - Monitoring Phase
For a performance management process to be effective, progress must be continuously monitored. Monitoring means that:

  1. progress towards the objectives set in the workplan is assessed frequently;

  2. feedback on progress relative to the goals is given to the employee; and

  3. adjustments are made as necessary.

When providing feedback on performance remember to provide both positive feedback in addition to any negative feedback that is necessary. Expert opinion is that there should be four or five positive comments for every negative comment.

CHECKLIST: The Monitoring Phase

  1. Meet two to three times per year to review the plan and assess progress in meeting the performance objectives

  2. Identify any changes that may be required to the plan. Changes may be required for several reasons. For example, there could be a shift in organization priorities or the employee is required to take on unforeseen duties.

  3. If serious performance problems are occurring, they need to be discussed in the context of these monitoring sessions and corrective action needs to be taken (see Conducting a Constructive Feedback Session below).

  4. Determine if any extra support is required from the supervisor or others to assist the employee in achieving the objectives.

  5. Keep track of the accomplishments and progress by writing them down on the performance management form.
Conducting a Constructive Feedback Session
If an employee is not performing up to the standards set, you will need to conduct a constructive feedback session. It's important to conduct this session before any performance problems get out of hand. It can also demonstrate due diligence if the incident persists and disciplinary action is taken.

  • Prepare for the meeting

  • Confirm the facts of the performance issue - make sure you know what happened and how the employee might have perceived the situation. Be clear about what you see is the problem and think through what you want to say. Be clear about the consequences if the employee's behavior does not improve.

  • Arrange to hold the discussion in a location where there will be privacy and no interruptions.

  • If you are emotionally upset about the problem, allow yourself time to calm down. Try to appproach the discussion objectively and impersonally.

  • Set the climate

  • Establish a positive and co-operative environment by using a non-threatening, matter-of-fact tone.

  • State the facts

  • Describe the unacceptable performance in an objective, factual, nonjudgemental way, citing specific examples of the behavior in question.

  • Identify the negative impact on you or on others in the workplace.

  • Listen

  • Have the employee describe the situation as they see it and provide an explanation.

  • Be open to any new insights on the problem coming from the employee.

  • Obtain the employee's agreement that a problem exists

  • Respond to denial, blaming of others, etc. by restating factual information and reviewing the negative impacts of the unacceptable behavior.

  • Agree on an action plan

  • Ask the employee for their suggestions for solving the problem.

  • Offer your suggestions if necessary.

  • Agree on a specific plan of action: have the employee tell you what they plan to do, how they plan to do it, and within what time period.

  • Document the action plan.

  • Specify the consequences for the employee if the problem is not corrected.

  • Follow up

  • Monitor results and meet on a periodic or regular basis to discuss progress.

  • Provide positive reinforcement of any improvement and continue to offer your help and support.

  • If the behavior has not changed over the specified time period, enact the consequences as discussed in the action plan.
Phase 3 - The Review Phase
At the end of the performance management period, usually one year, the employee and the manager sit down to:

  1. summarize the work accomplished during the previous year relative to the goals that were set at the beginning of the performance period;

  2. document challenges encoutered during the year; and,

  3. identify areas for training and/or development
CHECKLIST: Performance Review Phase

  1. Review the purpose and process of a final meeting.

  2. Capture the key results, both accomplishments and shortfalls, for each performance objective and each learning objective.

  3. Let the employee take the lead - ask for his/her assessment of their performance during the review period. The supervisor should do the same and any differences in assessment should be compared and discussed. Make sure the employee has an opportunity to respond to the supervisor's comments.

  4. Do not invent areas for improvement and do not deviate from the agreed-upon objectives. If the employee has done an excellent job all year, digging for something to identify as an area of improvement will only lead to demotivation.

  5. Identify and discuss any unforeseen barriers to the achievement of the performance and learning objectives.

  6. The employee and the supervisor should sign off on the form. This acknowledges involvement in the process, but not necessarily agreement by employee with the content of the evaluation.

  7. Ensure that the employee receives a copy of the evaluation and the document is put in the employee's file.

  8. Both the supervisor and employee should prepare for the next cycle of performance management.

Some organizations do not allow a manager/supervisor to document anything negative in a performance management review if it has not already been discussed with the employee. This is done to ensure that managers deal with performance problems when they arise and that there are no surprises during the performance review meeting. Review your new performance management process after the first year and make adjustments if necessary.

5. Training Your Organization's Raters

For a performance management process to succeed in motivating staff to do their best it must be fairly and consistently applied to all staff.
Managers/supervisors must be trained on:

  1. the overall performance management process

  2. how to work with employees to set goals and standards

  3. how to provide constructive feedback

  4. how to conduct a performance management review

  5. the sources of rater bias
Well trained raters will help ensure that the performance management system is reliable, that is, the results of the process are accurate measures of performance and the raters are consistent over time.

Common Sources of Rater Errors or Bias
Supervisors/managers should be aware of the potential sources of errors when rating performance and make every effort remove these potential sources of error from the evaluation process:
  1. HaloThe supervisor's positive opinion of the employee in one area affects the performance ratings in all areas. This is particularly a problem when supervisor are rating employees whom they consider to be friends.

  2. HornsThe supervisor's negative opinion in one area affects the performance rating of all areas.

  3. Central TendencyThe rater is uncomfortable with evaluating an employee's work to be at either end of a rating scale such as "Exceeded Expectations" or "Did Not Meet Expectations". Instead the rater consistently rates employees in the middle of any scale.

  4. Leniency or StrictnessThe rater is either too easy or too harsh when rating performance.

  5. RecencyThe rater focuses on performance for the recent past and does not look at performance for the entire evaluation period.

  6. Same-As-MeThe rater rates employees who are perceived to be similar to the rater more favorably than employees who are dissimilar.If this tendency is based on grounds for discrimination under Human Rights Legislation (for example race, gender, nationality), it is a violation of Human Rights and is illegal.

  7. ContrastThe rater evaluates an employee against another employee that was rated just before the current performance review meeting.
6. Designing an Appeal Process
Even with a well designed and implemented performance management process, there may be situations when an employee has a serious difference of opinion with the manager about his or her performance assessment. A procedure for the employee to discuss disagreement with the process should be established.
Some options for dealing with disagreements about performance appraisals are:

  1. Step Review SystemThe disagreement is heard by higher levels of management such as the supervisor's manager, followed by the Executive Director as necessary. In small non-profit organizations there may not be higher levels of management to appeal to.

  2. Peer Review SystemA small group made up of equal numbers of employees and management staff review disagreements.

  3. OmbudsmanEmployees can seek assistance from an individual within the organization who is designated as an impartial ombudsman. An ombudsman does not have the authority to override a decision, but the ombudsman can refer the disagreement up the line of authority, if necessary.
7. Final Checklist for Your Performance Management System
As stated previously, performance management has a variety of purposes, one of which is documentation should there be a legal challenge related to performance.
To ensure that your performance management process is defensible:

  1. Base the process on well written job descriptions and job-related activities

  2. Have the manager and employee collaborate on setting performance objectives

  3. Establish results (objectives) and behaviours for which you can develop observable measures; avoid traits such as 'initiative' which require subjective assessments

  4. Ensure that the employee keeps a copy of the performance plan (work plan) and expectations set at the beginning of the performance management cycle

  5. Provide ongoing monitoring and feedback on performance to the employee

  6. When problems are identified with performance, provide support (training, coaching, etc.) and adequate time for the performance to improve

  7. Train managers/supervisors on all aspects of the process and on how to make bias free assessments

  8. Ensure that the performance management form accurately documents performance - if overall performance is poor say so

  9. Periodically review the performance management process to ensure that it is being applied consistently

  10. Establish an appeals process

Performance Assessment systems design and emplementation, to my opiniion, is a cultural issue. It can neither be developed nor managed in isolation of the business values of the organization. It reflects both the business philosophy and attitude towards people who work for the organization.

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