Developing performance management

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1 Questions this tool will help you answer: How should performance be described in my organisation? What should performance management be seeking to achieve in my organisation? What tools will most effectively manage performance in my organisational context? Who are the stakeholders in performance management and what benefits should they be getting? How should the impact of performance management be assessed and evaluated? 1 of 16

2 Help using this tool Navigation To navigate through chapter headings in the tool, use the bookmarks in Adobe Acrobat Reader. To navigate through individual pages, use the icons on the bottom right of each page. the web this tool Links Red links will link you to the CIPD website or an external website. Blue links will link you to other areas within the tool. If you experience any difficulty with the links provided in this tool, you may need to update your version of Adobe Acrobat Reader. You can download a free update from: The Adobe Acrobat Reader preferences must be set up as follows: Edit / Preferences / Internet then you must make sure Display PDF in browser is checked. i-boxes i-boxes will open up extra useful information in a panel when you click on them. Click anywhere on the panel to close it again. Print To print a page use the Adobe Acrobat Reader print facility. 2 of 16

3 Benefits of using this tool For you Diagnose the performance management needs of your organisation. Identify the different stakeholders and their different expectations of performance management. Design the most effective performance management process to meet these needs. Demonstrate the impact of performance management. For your organisation Support line managers to develop positive relationships with employees. Improve communication. Ensure alignment of individual effort with organisational strategy and objectives. Download the latest version of Adobe Acrobat Reader If you experience any difficulty with the links provided in this tool, you may need to update your version of Acrobat Reader. You can download a free update from: 3 of 16

4 Toolmap Help using this tool Benefits of using this tool Toolmap Developing performance management Stage 1: diagnosing the need Stage 2: design and planning Stage 3: pilot and review Stage 4: implement action and training Stage 5: evaluation Further reading 4 of 16

5 Developing performance management The five stages of a development programme to improve performance management are described in this tool. At each stage it is necessary to seek the views and approval of senior management and to involve line managers, staff and their representatives in the programme. The aims of the programme must be communicated to all stakeholders together with details of how these aims will be met and what factors might hinder them. Everyone should be given realistic expectations of the potential benefits that performance management can have and the role they will need to play to ensure its success. Diagnosing the need Design and planning Pilot and review Implementation and training Evaluation 5 of 16

6 Diagnosing the need Design and planning Pilot and review Implementation and training Evaluation Stage 1: diagnosing the need Whether implementing a new system or revising an old, the diagnostic phase should seek to establish the needs of all stakeholders and identify any problems to be addressed. If a performance management system is already in place, it should attempt to establish the extent to which the organisation s requirements are met by the existing arrangements, the elements that are working well and those aspects that are receiving negative from users. Record your answers to the following questions in the notes boxes. Diagnostic checklist To fully understand what is needed in terms of performance management, the answers to the following questions should be available: 1 What does good performance look like in our organisation? What are the inputs, for example effort, knowledge? What are the outputs, for example positive behaviours, good customer, financial success, achievement of objectives, generation of new ideas? Is the view of good performance consistent across the organisation? 2 Are managers committed to managing performance? Do line managers have the skills to carry out their performance management duties effectively? Are senior managers supportive? 3 What does performance management need to address? For example: effectiveness of line management communication role clarity reward development direct link with strategic objectives. 4 Does our organisational culture encourage or hinder high performance? Is there sufficient common understanding of what the culture is to inform and underpin performance management? Is performance recognised and rewarded? Are managers able to give praise in a positive way? Is performance recognised in any espoused values? Notes 6 of 16

7 If an existing performance management programme is being redesigned, it would also be useful to answer the following: 1 How are current performance management processes perceived by individuals and managers? 2 Do staff believe performance management is carried out effectively by managers? Do they believe that they benefit from performance management in the sense that they get good and guidance and support in developing their talents and careers? Do they believe managers make judgement about their performance fairly and accurately? 3 Are performance management processes integrated with strategic and business planning processes and/or other HR processes? Do performance objectives flow from the strategic business objectives? Is performance management information used to inform deicison-making on pay, development or talent management? 4 Do all stakeholders (that is, top management, line managers, individual employees and employee representatives and HR) within the organisation feel ownership of the process? Are they willing to devote sufficient time to complete the process? Do they feed back on the value of the process? Are they willing to be involved in any redesign of the process? 5 Are the aims and operation of performance management and how it can benefit all concerned communicated thoroughly and effectively? Does everyone have the same understanding? Does everyone know what they are expected to do? 6 Is training in performance management skills given to both appraisers and appraisees? Is the documentation being completed appropriately? Are there any problems with the process being applied consistently across the organisation? Ideally, it would be helpful to use these questions as a basis for an employee questionnaire or a series of focus groups to gather views from a range of levels in different parts of the business on the current use and future needs of performance management. 7 of 16

8 Diagnosing the need Design and planning Pilot and review Implementation and training Evaluation Stage 2: design and planning Planning the development and introduction of performance management requires: 1 The preparation of a summary of the diagnostic review, setting out the following: an analysis of the situation highlighting issues that will need to be addressed and challenges that might need to be overcome the reasons for introducing performance management or redesigning an existing system and the potential outcomes the specific aims of performance management for the medium and long term relevant to particular organisational circumstances success criteria detailing how achievement of these aims will be met with timescales. 2 A summary of the elements of the process with a definition of the roles of various stakeholders. This should include any specific actions intended to encourage a performance culture, a summary of how organisational values will be reflected and how the process will relate to other processes to manage talent, careers and development of reward. 3 An assessment of the expectations of all stakeholders, including external stakeholders such as customers, to ensure alignment of internal processes and objectives with external factors such as customer expectations and judgements of performance. 4 An assessment of the resources required to develop performance management. 5 A programme setting out a timetable for: from all stakeholders on the proposals obtaining support from senior managers and stakeholders communication of proposals with staff at all levels, including getting involvement in the design of the process and buy-in from staff representatives getting support and buy-in from line managers on both the design and implementation of proposals providing training for both managers and staff (important) providing the resources required to develop the scheme (people and money) communicating details of the plan and the scheme to employees (it is vital that this should be done thoroughly and in good time) pilot scheme arrangements (it is generally desirable to pilot test the scheme) 6 A plan for monitoring and evaluating implementation against agreed success criteria. Examples of success criteria a Measures of individual performance such as competence levels, proportion of employees rating as good performers or above on appraisal system or fewer incidences of poor performance occuring. b Measures of organisational performance such as profitability per employee, customer, customer repeat business. c Measures of job satisfaction d Measures of employee engagement e Feedback on management behaviour f Skills, closing skills gaps, rising skill levels, return on investment in development 8 of 16

9 The following points should be considered when designing the performance management scheme and deciding on the processes required: how performance planning should take place what skill sets and/or competences need to be maintained or delivered; how often these will be reviewed and if they need to be tailored to the needs of individual business units or teams the use of personal development plans approaches to managing performance on a continuous basis how and when performance management review meetings should take place, including the definition of the responsibilities of both parties for preparing for the review as well as taking part in it the documentation required the link to performance- or contribution-related pay, if any how assessments will inform pay decisions the use of 360-degree appraisal the use of self-appraisal the use of objectives the form they should take, how they will be measured. Input your notes here to produce an action plan for design and planning For more information see the following links: Performance appraisal factsheet Appraisal: getting managers buy-in a training activity Performance-related pay factsheet Development planning for individual employees factsheet 9 of 16

10 Diagnosing the need Design and planning Pilot and review Implementation and training Evaluation Stage 3: pilot and review It is essential that all proposals even the redesign of an existing process are adequately piloted before full implementation. The pilot process should test the ease with which any documentation can be completed, understanding of both appraisees and appraisers of the process and its aims and objectives that is, the why as well as the how of performance management. Piloting is important both because too cumbersome or obscure a process will produce a negative reaction from both appraisers and appraisees which may impact on their willingness to complete it. It is also important that all stakeholders fully understand the issues and rationale for performance management as well as how to complete the paperwork to enable it to address the issues rather than become an automated tick box exercise which only provides information on objectives and training requirements. At the end of the pilot stage it would be useful to revisit the diagnostic questions and review whether the draft proposals have increased or changed understanding of these issues. The challenges and aims contained in the initial proposal should also be reviewed against the to ascertain whether these will be met or whether further review and development is necessary. In addition, after the pilot process a further round of consultation and should be undertaken ideally after a full cycle of performance management has taken place to ensure the process has the best chance of achieving its stated intentions. Finally, all staff should be adequately briefed on the process, what their role will be and what they will need to know to fulfil it as well as what the benefits are likely to be, what the process is trying to achieve and what impact it is likely to have on their behaviour and activities. An overall description of the performance management scheme should be issued to all employees, setting out its objectives and method of operation and the benefits it is expected to provide for all concerned. Some organisations have prepared elaborate and lengthy briefing documents, but fairly succinct documents are often sufficient as long as they are written in simple language and are well produced. It is desirable to supplement written with oral briefings through a briefing group system, if there is one, or a special briefing programme. In a large or dispersed organisation this briefing will have to be carried out by line managers, who will have to be briefed on what they should do. 10 of 16

11 Pilot checklist 1 Select pilot group. Ensure this group adequately reflects the characteristics of the groups to which full performance management process will be implemented. 2 Brief the pilot group on the required. 3 Train the pilot group on both the purpose and process of performance management and ensure they understand what the intended outcomes will be. 4 Gather on both the process and the ease with which is could be completed as well as understanding of the issues and rationale for performance management. 5 Review in the light of intended outcomes: a Is the documentation being understood consistently? b Is the documentation being completed appropriately? What questions or queries are being raised? c Is the information generated capable of analysis to inform decision-making? d Is the process delivering the expected outcomes? e Can the process be evaluated against the agreed success criteria? 11 of 16

12 Diagnosing the need Design and planning Pilot and review Implementation and training Evaluation Stage 4: implementation and training Once the process has been agreed, managers should be fully briefed on the timetable of actions to implement the system, including the paperwork or online forms. Performance management is not easy. It requires high levels of skill by everyone involved and the skills are likely to be ones that have not yet been developed or put into practice. Providing, for example, that will motivate and help to develop people is not easy for those who have not done it before. Receiving, responding to and acting on are similarly unfamiliar skills for many people. The agreement of objectives and competence requirements, the application of performance measures and methods of analysing and using the outcomes of reviews may also be strange. The concepts of personal development planning and self-managed learning will be new to many people. The main performance management skills that people need to learn are: defining accountabilities and key result areas defining objectives identifying and using performance measures defining and assessing competencies and behavioural requirements giving and receiving questioning and listening identifying development needs and preparing and implementing personal development plans diagnosing and solving performance problems coaching. Training may be provided by formal courses but there will be a limit to the amount of time that can be spared. Continuing encouragement, coaching, guidance and support are also required. This can be provided by HR but this can usefully be supplemented by experienced line managers acting as coaches. For further information on coaching see Coaching factsheet. 12 of 16

13 Diagnosing the need Design and planning Pilot and review Implementation and training Evaluation Stage 5: evaluation It is essential to evaluate both the effectiveness and impact of performance management. This can be done in a number of ways: 1 Conduct opinion surveys or ask individuals to complete a questionnaire immediately following a review meeting. Opinions should be reviewed on the following four areas: A B C D Communication and relationships with line managers: a Do individuals feel well-informed by their line managers about their role and what they need to do to perform it well? b Do individuals trust line managers to make fair and accurate assessments on their performance? c Do they feel their line managers actively encourage their opinions and are willing to listen to them and feed these opinions into their decision-making? d Do individuals feel sufficiently informed by line managers about organisational objectives and how these relate to their personal objectives? Alignment of purpose understanding of and identification with values: a Do individuals understand the core purpose of the organisation what it is here to do? b Can they relate this to their own role? c Do individuals understand who their customers are and what they need to do to meet the needs of these customers? Measurement of performance: a Do individuals understand what good performance looks like for them as individuals, their team and the organisation? b Do they feel the organisation makes informed and fair assessments of performance? Impact: a Do individuals understand the outcomes of their performance for the organisation? b Do they believe performance management enables them to make better career progression or access development opportunities? 13 of 16

14 2 Collect from managers using the following areas of questioning: whether the process helped them to develop more positive relationships with the people they manage whether the process helped them to make fair judgements on individual performance and positive recommendations for improvement for the future the ease with which they were able to complete the paperwork the extent to which they buy into the reasons for performance management and its potential benefits and how far they believe these are met by the process. 3 Assess contribution of individual objectives to organisational objectives by tracking back from performance management data to organisational measures. For example, collect data on the percentage of individuals who fully or partly met objectives and correlate against organisational performance measures, such as customer, sales volume, new products to market, and so on. 4 Assess other indicators, such as the numbers of poor performance procedures being instigated, absence rates, engagement scores, turnover and the numbers of grievances being dealt with. 14 of 16

15 Example of a survey on the performance review process I was given plenty of opportunity to contribute to formulating my objectives. I am satisfied that the objectives I agreed to were fair. I felt that the meeting to agree objectives helped me to focus on what I should be aiming to achieve. I received good from my manager during the year on how well I was doing. My manager was always prepared to provide guidance when I ran into any problems with my work. The performance review was conducted by my manager in a friendly and helpful way. My manager fully recognised my achievements during the year. Any criticisms made during the review were based on fact, not on opinion. I was given plenty of opportunity by my manager to discuss the reasons for any problems with my work. I felt that generally the comments made by my manager at the review meeting were fair. The review meeting ended with a clear plan of action for the future, with which I agreed. I felt well motivated after the meeting. 15 of 16

16 Further reading From the CIPD website CIPD. (2009) Performance management in action: current trends and practice. Hot topic CIPD. (2009) Performance management: history and foundations. Discussion paper. CIPD. (2008) Performance management: episode 25. Podcast. GILLEN, T. (2007) Performance management and appraisal. Toolkit. GILLEN, T. (2008) Performance management: appraisal, objectives and career development. DVD. McGEE, R. (2008) Managing performance problems. Mini toolkit. Other sources of information ARMSTRONG, M. (2006) Performance management: key strategies and practical guidelines. 3rd ed. London: Kogan Page. INCOMES DATA SERVICES. (2009) Performance management. HR studies. London: IDS. PURCELL, J., KINNIE, N. and SWART, J. (2009) People management and performance. Abingdon: Routledge. STIFFLER, M.A. (2006) Performance: creating the performance-driven organization. Hoboken, NJ: Wiley. 16 of 16

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