Key Steps to Implementing Performance Management

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1 Key Steps to Implementing Performance Management

2 Key Steps to Implementing Performance Management COPYRIGHT NOTICE PPA Consulting Pty Ltd (ACN ) You may only use this document for your own personal use or the internal use of your employer. Without limiting the foregoing, you may not, without the express written permission of the copyright owner, on-sell or commercialise the whole or any part of this document. Except as expressly authorised, and subject to the conditions prescribed under the Copyright Act 1968 (Cth), you may not, in any form or by any means: (a) copy, adapt, reproduce, store, distribute, print, display, perform, publish, communicate to the public, make available to the public or create derivative works from any part of this document; or (b) commercialise the whole or any part of this document without the express written permission of the copyright owner. Disclaimer THE INFORMATION CONTAINED IN THIS DOCUMENT IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO CONSTITUTE ADVICE 2

3 Key Steps to Implementing Performance Management Overview These key steps are designed to provide a documentation template which can be incorporated into an organisation s performance management and development process. Performance management is one of the key employee management systems in a business. It should bring together what the business plans to achieve and what individual people are to achieve, as well how they are to do it. It should provide a continuous process of setting targets and providing feedback. Feedback should be two way: in addition to learning how they are progressing, the employee should be able to provide information on progress, resources necessary, training and development required, aspirations, and their overall level of satisfaction. In brief, performance management is about improving performance and satisfaction. If you wish to use this process with a group of your colleagues you may find the workshop manuals and materials available for purchase on our website of interest. Benefits A well thought through, fully integrated performance management and development program, which is actively supported at all levels in the organisation can deliver many benefits: Alignment of employee activity with achievement of company goals. Alignment of employee behaviour with company culture the way we do things around here. Effective use of people and their skills, knowledge and competencies to the advantage of the business and the individuals: enhanced return on the people investment. Greater chance of keeping the good people and attracting more good people. Effectively identifying and meeting learning and development needs. Less drain on company resources as performance and satisfaction issues are dealt with promptly before they become big issues. Contributes to sustainability of the business through an effective tool for succession, career and resources planning. Provides an input to knowing what to reward and how both financial and non-financial. Gives line managers techniques to create environments where employees can be motivated. Establishes an effective methodology for company communication. 3

4 Key Steps to Implementing Performance Management Scope This process can be adapted for use at all levels within the organisation. Key Steps 1. Clarify Objectives A vital first step is identifying some major objectives for the program. Clarifying the need for a performance management system, what and who it should include, what it will deliver and agreeing measures of what a successful implementation will look like. Some organisations choose to complete this step collaboratively with input from various employee groups; others delegate this as an HR Department responsibility; some organisations have a particular champion from anywhere within the business; others will involve outside consultants. Any of these methodologies can work. Whoever is involved in clarifying the objective, a good start is to use the definition above: improving performance and satisfaction. It is also vital to consider the business benefits rather than presenting the concept only from an employee s perspective. Many systems fail because they try to do too much and become too complex. Once a system is running effectively and delivering the expected results, it may be possible to add additional objectives when all parties have confidence in it and can see the value. Experience suggests that a business needs to complete a self examination before committing to implementing a new performance management system: Do employees believe the work we do here is worthwhile and that their individual jobs make a contribution to this? Do we have clear organisational values which we demonstrate consistently? Do we walk the talk? Are employees confident that if they do the right thing they will be recognised for that and appropriately rewarded? If the organisation cannot confidently answer in the positive in each of the three areas, then it helps to be aware of where there may be shortfalls and seek to address such issues concurrently with implementing the performance management system to increase its chances of success. A clear and communicated company vision, supported by clarity in people s jobs helps deliver the first element; Documented, communicated and demonstrated core competencies helps with the second; Formal and informal rewards which are seen as transparent, consistent and fair will help deliver the third. 4

5 Key Steps to Implementing Performance Management 2. Secure Senior Manager Buy-in Once the objectives are set with associated expected business outcomes, then the agreement of the senior management team is required before any implementation steps are taken. Most systems fail because they are seen as outside of a manager s day-to-day responsibilities, rather than integral to them senior managers must believe in the process and be seen to actively support it, talking it up at every opportunity and leading by example with line managers who report to them. It is important for senior managers to have a realistic understanding of how much management time will be required to implement and then integrate this system on an ongoing basis. Experience tells us that more time is required in the first year and, conversely, the first year usually delivers the poorest results. Understanding of the system, how it works and what it will deliver; and developing the skills necessary to carry our effective performance management often take time more time than expected. Having a clear understanding of the potential benefits is vital to securing the necessary support of senior managers. 3. Prepare system and supporting materials and documentation Develop a process and documentation to support the system. A template for this is attached. The format of the documentation is less important than the prompts included for managers and their staff to confidently address the key areas. The minimum prompts must include opportunity to: Review performance against the key parts of the job. Review performance against any specific goals or objectives which have been set. Review performance against the organisation s core competencies if they have been defined. Identify any learning and development needs for both short and longer term. Set goals for the next period. Allow for feedback on progress on an ongoing basis. Ensure job descriptions are current and in a form that provides clear and measurable results required. See our website for Key Steps to Writing a Job Description. If they are to be used, ensure core competencies are defined with associated behaviours and are communicated to all staff. See our website for Key Steps for Using Core Competencies. Determine how direct the link will be with pay review will there be an overall rating system or not? The main advantage of a direct link is enhanced objectivity in the pay review process. The main disadvantage is a risk that the rating may become disproportionately important during the process and focus is lost on the other objectives of the performance management and development program. Make the documentation easy to use providing hard copy or electronic or web-based. 5

6 Key Steps to Implementing Performance Management Consider the system as a cycle with goal setting, progress reviews and recognition/feedback on achievement and then determine a calendar for the key elements of the cycle. For example: Will goal setting be completed annually or six monthly? Will progress reviews be every month or two months? Will the formal achievement review the formal performance management and development interview be annually or six months and how will it fit with the pay review timetable and the annual business plans? The timing of the calendar should meet your organisation s specific needs. Experience tells us that more frequent progress reviews save time in the long run and help the process deliver better results. Decide who signs off on the process each cycle and who retains copies of the documentation and why. 4. Ensure managers are trained When the process is agreed and supporting documentation in place, training is the next key step. Most performance management systems fail because of lack of training of the people involved. Managers should be trained in the following: The objective of the system. The benefits of effective performance management for them, for the business and for their staff. Their responsibility for the system. The particular process you are going to use and why. Setting objectives why and how Measuring results do the hard work up front. Providing feedback what and how. Addressing performance issues why and how. Identifying development needs why and how. Managing performance is often an assumed skill in practice many line managers find this difficult and welcome development in this area. The development should include a mix of soft skills and process management as suggested above and should focus on this being an integral element of the line manager s role not an additional or administrative burden. Their own success will be impacted by how well they carry out this vital responsibility. If a manager cannot articulate a simple and common reason for using the performance management and development process, and be supportive of it, then it is unlikely the program will be a success. A typical training workshop to achieve this may run for one and a half days for each small group to allow understanding and skills to develop to the required level. Experience suggests that refresher sessions should also be scheduled. See our web site for performance management workshops available. 6

7 Key Steps to Implementing Performance Management 5. Ensure all participant employees are trained Most performance management systems fail because of lack of training of the people involved. For the employee groups selected to be included in the program, training should include the following: The objective of the system. The benefits of effective performance management for them individually and for the business. Their responsibility within the system linked to delivering the expected benefits. The particular process you are going to use and why Preparation what they need to do to make the most of the process. Setting objectives why and how. Measuring results doing the hard work up front. Indentifying development needs and own aspirations. Such training sessions can be completed with groups and each may run for a couple of hours or so this can be included in the induction program for new staff after the initial launch of the program. 6. Launch with champion A senior management champion for the process should be identified and should take responsibility for launching the program in an appropriate forum, outlining the major objectives and expected benefits. Subsequent to launching the program, the champion should continually seek opportunities to explore how the program is working, address opportunities to enhance it, talk it up and set the expectation that this is a core element of the organisation s business process. 7. Monitor and review success A schedule should be set and followed for reviewing the implementation of the program against key milestones and against the success measures which were determined in Step 1. Most systems require some adjustment during the first couple of years those which had clear objectives in the first place and were supported by appropriate training and senior management endorsement, are most likely to succeed. It is quite usual for other employee management processes to be reviewed during this time also to ensure full integration of the materials, techniques and supporting mechanisms. We strongly recommend using our training workshop manuals for training both managers and employees in the process of performance management to ensure a greater chance of success. 7

8 Sample Documentation <Company Name and logo> Performance Management and Development Program 8

9 Program Objective To ensure each <Company Name> employee has the maximum chance of achieving a high standard of performance and career satisfaction and, consequently, the Company increases its chance of achieving its objectives. Process Overview Performance Management and Development is an ongoing process designed to be an integral part of the day-to-day business. The informal process of communicating, tracking progress and coaching where necessary, should be happening regularly. In addition, the formal process involves the following steps. Step Action Responsibility Reviewer has initial discussion with employee. Reviewer collects information and prepares for review meeting. Employee prepares for review meeting. Discussion on past performance and satisfaction. Development needs discussed and plans formulated. Goals and measures for the next period agreed. Overall performance review confirmed and documentation completed. Action plans followed and achievements tracked; plans amended as needed. Continual improvement in satisfaction and performance Reviewer Reviewer Employee Reviewer and Employee Reviewer and Employee Reviewer and Employee Reviewer Employee and Reviewer Employee, Reviewer and Company 9

10 Process Guidelines Step 1 The reviewer holds a brief initial discussion with the employee to explain the process, set a time and encourage the employee to prepare for the discussion by completing Form 1. Step 2 The reviewer examines the information on hand relating to the employee s performance and career progression and collects more if required, learning from others with whom the employee interacts on a regular basis. Draft notes are prepared, using Form 2 as a guide, that relate to the achievement of goals, key result areas of the job and performance against the core competencies if they are being used. Step 3 The employee completes Form 1, which will assist them in their discussion with the reviewer. Step 4 The formal review discussion takes place, which may cover Steps 4, 5, and 6, or a separate time may be set for Step 6. Past performance against the job s Key Results Areas and pre-determined goals are discussed and the outcomes noted in Section 1, Form 2. The way in which the job has been accomplished should also be noted against the corporate competencies in Section 2. This may also serve as a useful input to discussion on further development. The focus remains on the person and their job performance and satisfaction. Step 5 After past performance and satisfaction has been discussed, along with future career aspirations, development plans should be agreed covering any skills, development or job changes required to meet the needs of <Company Name> and the employee. Think in terms of outcomes, not training courses or inputs. Section 3, Form 2 is used for collecting information on this and then Form 3 can be used for confirming the goals and plans needed. Step 6 Goals for the next period of review should be agreed with appropriate measures. The goals should relate to the Key Results Areas of the job, business or departmental objectives, specific core competencies, or the development needs of the individual. The period chosen should be suitable for the goals being set and may well be much less than one year. Form 3 is used for this this same Form can then be used for tracking process during the next period. Step 7 After an overall performance review has been confirmed in Section 4, Form 2, the documentation should be completed, shared with the reviewer s manager, and signatures obtained in Section 5. The employee and reviewer should each keep a copy of the documentation so that they can work towards achievement of the goals and continual improvement in performance and satisfaction. Step 8 Action plans should be followed and achievements continually tracked, Section 3, Form 2 can be used for this. There may be a need for several informal reviews during the course of the year and plans may need to be amended and changes agreed. Such reviews or changes should be documented for inclusion later in the formal annual review. Step 9 The process is a continuous one, integrated into day-to-day business, and the focus remains on maximising performance and satisfaction of the person in their job. It is not a once or twice a year event. 10

11 Performance Management and Development Plan Employee Preparation Form 1 Name: Date last Review: This period from: To: Note: This form is for your own use in preparation; you may choose to give a copy to your manager to help him/her prepare. What are the Key Results Areas within my job? Cross reference with Job Description and/or last Performance Management and Development Plan as needed. How well did I fulfil them? What specific goals were agreed for achievement? Cross reference to JD and/or last PMD Plan as needed. To what extent did I achieve them? What are the Core Competencies? How have I been applying them? Note as many specific examples as possible. 11

12 Job Satisfaction What have I enjoyed most and least during the period under review? Why? Note down as many examples as possible and use these ideas to help you with answers to the following questions. What changes, if any, could be made by my manager, or others within the Company, which could help me be more effective in my job? Be as innovative as possible think in terms of what value such changes could add. What kind of job would I like to be doing one to three years from now? Be as specific as possible about the contribution, even if such a job does not exist at the moment. In what areas do I need to learn or develop in the next year? Think in terms of what it is that you want to do differently either in your current job or to be able to take on a role at a different level within the organisation? What can you learn? Where or who can you learn it from? What goals do I feel are appropriate for the year ahead? Examine each Key Result Area in your JD, consider your Department s objectives, your own development needs and identify any goals you feel need to be achieved during some, or all, of the next review period. The measure for the goal is an indicator of how you, or anyone else, will know you have achieved the goal. Remember, this is only a draft at this stage: you will have a chance to talk it through further with your manager. Possible Goals Possible Measures 12

13 Performance Management and Development Plan Form 2 Name: Department: Annual Review Y/N Interim Review Y/N Date this meeting: Job Title: Manager/Reviewer: This period From: To: Date next meeting scheduled: Section 1. Review What are the Key Results Areas within the job? Cross reference with Job Description and/or last Performance Management and Development Plan as needed. How well did have they been fulfilled? What specific goals were agreed for achievement? Cross reference to JD and/or last PMD Plan as needed. To what extent have they been achieved? 13

14 Section 2. Core Competencies The following competencies are considered to be important to the future of our organisation. What examples have occurred over the review period where the competencies have been demonstrated or not? Details of each competency and sample behaviours are shown in our Competencies Document. It may not be necessary to have examples in each area in each review. Competency Comments and Examples Note as many specific examples as possible. 1. <List competency names and summary elements>

15 Section 3. Development Plans Use this section to note down ideas and information on what the employee has enjoyed most and least and things that, as a result of the review of past performance, the reviewer and/or employee feel the employee needs to do differently and what skills or knowledge need to be acquired in order to achieve this change or improvement? Think in terms of what is it that the employee needs to do differently to improve performance and/or satisfaction. What can they learn? Where or whom can they learn it from? What changes would need to be made to the job or current work practice to improve overall effectiveness? Is there anything the Company or its representatives could do differently to improve performance and satisfaction? Note: in this work practice section, action plans do not need to be agreed at this stage: they may just be ideas to explore. Use this section to note down ideas and information about the employee s career aspirations? Where would he/she like to be in one to three years time? Be as specific as possible about the contribution or type of work, even if such a job does not exist at the moment. With regard to planning for future performance, consider what the employee needs to do differently to meet future job challenges and what skills or knowledge need to be acquired to achieve this? Think in terms of what is it that the employee needs to do differently to be able to take on a role at a different level within the organisation? What can they learn? Where or whom can they learn it from? Please use Form 3 to outline the development plans which need to be implemented to achieve the above. Please include an appropriate time frame for those agreed on and be specific about the expected outcomes. Think in terms of outputs required rather than training courses or other inputs. Eg Be able to accurately set up systems for recording and analysing data and prepare reports with recommendations for action NOT Advanced Excel course 15

16 Section 4. Overall Performance Assessment Together, review the key outcomes and performance of the employee over the review period and determine the overall performance assessment. Reviewers, please mark your rating on the scale provided. Unacceptable performance Marginally meets expectations Meets expectations Exceeds expectations Significantly exceeds expectations Section 5. Comments and Signatures Reviewer s Comments: Signed: Employee s Comments: Date: Signed: Reviewer s Manager s Comments: Date: Signed: Date: Note: After sign off, one copy of this form with Form 3 attached, should be given to the employee for retention, and the original returned to the reviewer, for use by both in the next period. Any development plans which may need additional resources should be advised to the HR or Learning and Development area for assistance. 16

17 Performance Management and Development Plan Goal Sheet Form 3 Name: Department: Job Title: Manager: Primary Purpose of Job: Cross reference with Job Description Period From: To: Date of Meeting: Link with the Job Description Key Results Areas and Key Competencies and/or Individual Development Plans. List the major goals for the forthcoming time period; it may help to number them for cross reference with Form 2 for the next formal Review Meeting. In all cases, including individual development goals, please indicate how success will be measured. A copy of this same sheet can be used for regular progress reviews. Goal Measures Progress Core Competencies Seek opportunities to observe and acknowledge specific examples of when and how core competencies are demonstrated on a day-to-day basis. Employee Signature: Date: Manager s Signature: Date: 17