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 Develop a
organisational Align individual and performance
performance organizational objectives culture
33% 22% 17%

Improve 3% 3%
individual 6%
performance
14%

Align individual Basis for Inform pay

behaviour to personal decisions
organizational development 21%
values
 Performance management – practitioners’ principles

‘Performance ‘A ‘Driven by
management is management ‘It’s about how corporate
what managers tool which we manage purpose and
do: a natural helps people – it’s values.’
process of managers to not a system.’
management.’ manage.’

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interested in
‘To obtain things you can
solutions that do something
work.’ about and get
a visible
improvement.’

‘Success
‘Focus on depends on
‘Based on
changing what the
accepted ‘Focus on organization is
behaviour principles but
rather than development and needs to be
operates
paperwork.’ flexibly.’ not pay.’ in its
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 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 66–84
 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 Act

• dialogue and feedback
• agree strengths and any • carry out role
areas for improvement • implement performance
• build on strengths – ‘you are improvement plan
particularly strong in this area’ – • implement personal
how can you make development plan
even greater use of them?

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 • Define role profile, updating as necessary
• Ensure that role profiles set out updated key result
areas and competency requirements
Performance • Define goals and standards of performance
agreement • Identify and define key performance indicators
• Draw up performance development plans
• Draw up personal improvement plans

Managing • Monitor progress and review evidence of achievements

performance • Provide informal feedback as required
Continuing dialogue throughout the • Provide coaching as required
year • Update role profiles and goals as necessary

• Prepare for performance review by analysing

achievements (work and learning) against goals and
plans
Performance • Identify specific strengths and weaknesses on the
review basis of evidence
• Assess overall performance
• Provide feedback
• Use conclusions of performance review as the basis for
End of year 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. What is the overall purpose of the role?
2. How does the role contribute to the achievement of the
organization’s strategic goals?
3. What are the key result areas in the role which define what has to
be achieved – no more than five or six.
4. What will indicate how well the role holder has performed in each
key result area (the key performance indicators)?
5. How are the key result areas aligned to the key result areas of the
organization?
6. What is the role holder expected to know to be able to carry out
the role?
7. What skills are needed to carry out the role?
8. 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 Method of Timing Review

development development Indicate Progress in
Note the three most Indicate what method of completing the
when the
important areas for the development should be development
development
development of used eg coaching, self- plan in each
activity
knowledge, skills or managed learning using area
should take
behaviour learning resources such as place
e-learning, mentoring,
formal training
Knowledge: Three-day course run by June 5 next
Needs to know more about Camden metropolitan year
zero-based budgeting University

Skills: Coaching by By end-

Management Accountant February next
Needs to develop skills in
year
presenting budgetary
control information to
managers
Competencies: Attend next company January 15 next
three-day leadership year
Needs to develop
development course
leadership competencies
 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. Business role clarification – clear

statement of agreed role and
objectives.
2. Performance planning – agreement of
targets to achieve the ‘plan-do-
evaluate’ elements of managing
performance.
3. Performance development – agree
skills required and prepare individual
development plan.
4. Performance measurement – provide
ongoing feedback and an annual
summary of an employee’s
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.