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Performance management – Best Practice Process and Principles

  2. 3-DAY, TRAINING PROGRAMME OVERVIEW • Fundamentals of Performance Management • Building a Balanced Scorecard – objectives, measures and targets • Performance Management cycle/process • Managing poor performance • Incapacity Procedure (Poor Performance) - LRA • Best practice guidelines for performance counseling • Performance-based coaching – principles and process • Case Study: Dealing with Poor Performance
  3. INTRODUCTORY ACTIVITY • Individual activity:  Complete the following statement by inserting one word only. As a manager, in order to effectively manage employee performance, I need to/to be………………………………………………………  Jot this word down and find other learners who have written down the same word.  Write this word down on the flip-chart.  You’ll be given the opportunity to substantiate your choice of word.
  4. DEFINING THE FUNDAMENTAL, PERFORMANCE MANAGEMENT CONCEPTS • Performance Management • Key Performance Areas (KPA’s) • Key Performance Indicators (KPI’s) • (Applied) Competency • The Balanced Scorecard (BSC)
  5. DEFINING PERFORMANCE MANAGEMENT (PM) • PM can be seen as a comprehensive management system aimed at constantly improving and monitoring the performance of others. • PM concerns itself with improving productivity, delivering a better quality service/product and is aimed at achieving the goals of both the institution and the employee. • PM is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of people who work in them and by developing the capabilities of teams and individual contributors. • PM entails three (3) important components/dimensions, namely:  Evaluation (i.e. appraisal and measurement)  Development (i.e. improving performance through the acquisition of skills)  Relationships (between team leaders and team members)
  6. KPA’s and KPI’s • Key Performance Areas (KPA) may be defined as the primary responsibilities of an individual or the core area(s) which each employee is accountable. • KPA’s originate from the organization’s mission and represent the specific areas where the organization expects results. • Key Performance Indicators (KPI’s) define unit of measure used to assess whether or not Key Performance Area have been achieved. • KPI’s clarify how performance will be judged against each KPA. They provide the framework for generating targets, and are the core of all performance management systems.
  8. COMPETENCE • “Applied Competence is the union of practical, foundational and reflexive competence” • Practical Competence - the demonstrated ability to perform a set of tasks in an authentic context. A range of actions or possibilities is considered and decisions are made about which actions to follow and to perform the chosen action. • Foundational Competence - the demonstrated understanding of what the learner is doing and why. This underpins the practical competence and therefore the actions taken. • Reflexive Competence - the learner demonstrates the ability to integrate or connect performance with understanding so as to show that s/he is able to adapt to changed circumstances appropriately and responsibly, and to explain the reason behind an action. • Thus competence is understood as including the individual’s learning, understanding and ability to transfer and apply learned skills and knowledge across a wide range of work contexts.
  9. BALANCED SCORECARD • The Balanced Scorecard (BSC) is a strategy performance management tool - a semi-standard structured report, supported by design methods and automation tools that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. • The critical characteristics that define a Balanced Scorecard are: Its focus on the strategic agenda of the organization concerned The selection of a small number of data items to monitor A mix of financial and non-financial data items
  11. • The balanced scorecard suggests that we view the organization from four (4) perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: Learning, Innovation and Growth Business (Internal) Processes Customer Financial BSC PERSPECTIVES/DIMENSIONS
  13. • Strategic question:  “To achieve our vision, how will sustain our ability to change and improve?” • Examples (measurable indicators):  Time to develop new generation of products  Life cycle to product maturity  Time to market versus competition  Is there the correct level of expertise for the job?  Employee turnover  Job satisfaction  Training/Learning opportunities • Value Outcome:  Organizational knowledge and growth capacity LEARNING, INNOVATION AND GROWTH PERSPECTIVE
  14. • Strategic question:  “To satisfy our shareholders and customers, what business processes must we excel at?” • Examples (measurable indicators):  Cycle time  Unit cost  Yield  New product introductions  Number of activities per function  Duplicate activities across functions  Process alignment (is the right process in the right department?)  Process bottlenecks  Process automation • Value Outcome:  Efficiency BUSINESS (INTERNAL) PROCESS PERSPECTIVE
  15. • Strategic question:  “To achieve our vision, how should we appear to our customers?” • Examples (measurable indicators):  Percent of sales from new products  On time delivery  Share of important customers’ purchases  Ranking by important customers  Delivery performance to customer  Quality performance for customer  Customer satisfaction rate  Customer percentage of market  Customer retention rate • Value Outcome:  Customer satisfaction CUSTOMER PERSPECTIVE
  16. • Strategic question:  “To succeed financially, how should we appear to our shareholders?” • Examples (measurable indicators):  Cash flow  Sales growth  Operating income  Return on Equity (RoE)  Return On Investment (ROI)  Return on Capital Employed (RoCE)  Financial Results (Quarterly/Yearly) • Value Outcome:  Financial performance/profitability FINANCIAL PERSPECTIVE
  17. • Articulate the business's vision and strategy • Identify the performance categories that best link the business's vision and strategy to its results (e.g., financial performance, operations, innovation, employee performance) • Establish objectives that support the business's vision and strategy • Develop effective measures and meaningful standards, establishing both short- term milestones and long-term targets • Ensure company-wide acceptance (ownership) of the measures • Create appropriate budgeting, tracking, communication, and reward systems • Collect and analyze performance data and compare actual results with desired performance • Take action to close unfavourable gaps PURPOSES OF THE BSC
  20. • The strategic elements developed in Steps one and two are decomposed into Strategic Objectives, which are the basic building blocks of strategy and define the organization's strategic intent. • Metrics must also be aligned with the company's strategic plan. • The metrics set up also must be S-M-A-R-T STEP 3: OBJECTIVES - STRATEGY ACTION COMPONENTS
  22. • Leading and lagging measures are identified Lagging indicators are typically “output” oriented, easy to measure but hard to improve or influence Leading indicators are typically input oriented, hard to measure and easy to influence • Expected targets and thresholds are established • Baseline and benchmarking data is developed • Key Performance Indicator (KPI) and Performance Measure Development STEP 5: PERFORMANCE MEASURES - MEASURES AND TARGETS
  23. • Provide a way to see if our strategy is working • Focus employees' attention on what matters most to success • Allow measurement of accomplishments, not just of the work that is performed • Provide a common language for communication • Are explicitly defined in terms of owner, unit of measure, collection frequency, data quality, expected value (targets), and thresholds • Are valid, to ensure measurement of the right things • Are verifiable, to ensure data collection accuracy GOOD PERFORMANCE MEASURES
  25. DEVELOPING KEY PERFORMANCE INDICATORS • Developing KPI’s is a straightforward process. • Simply translate KPA’s into measurable values. • The values may be numerical or qualitative. • Refer to examples of KPI’s, as set out in tables 1-3
  27. PERFORMANCE TARGETS • Target setting is the key ingredient to success. • Without target setting, huge amounts of energy can be lost, unharnessed, unused. By working consistently toward the attainment of certain clearly defined, specific targets, energy can be tightly focused and the results astounding. • Targets are set to steer the organization/team/individual during the short-term. • Targets are needed to drive performance and to measure performance; to improve performance and to control performance. • Refer to the standards for target setting (page 26)
  28. LEARNING ACTIVITY 1 • Group discussion • Apply the Balanced Scorecard terminology and approach to a defined organizational context. Develop the following: Objectives Measures Targets • Provide feedback in the form of summary
  29. PERFORMANCE MANAGEMENT (PM) • Defining the fundamental concepts • The need for PM • Best Practice Criteria: Performance Management • The Performance Management process
  30. • Refer to pages 29-30 in Learner Guide • Critically evaluate your organization’s current Performance Management processes and systems against the best practice criteria. • Identify gaps and recommend improvement strategies. DIAGNOSTIC LEARNING ACTIVITY
  32. STEP 1: PERFORMANCE PLANNING • Clarifying expectations • Setting of goal/objectives, performance standards and criteria • Action Planning • Contracting Performance Agreements
  33. Accenture Microsoft Adobe Deloitte Medtronic Gap General Electric • To date nearly 10% of Fortune 500 companies have abolished their annual ratings, according to Cliff Stevenson, a senior research analyst for the Institute for Corporate Productivity, a research network that studies management practices. WHAT DO FOLLOWING COMPANIES HAVE IN COMMON?
  34. PERFORMANCE REVIEW/APPRAISAL • Monitoring, Measuring/Evaluating performance against the pre-determined performance goals/objectives and standards and criteria.
  35. PERFORMANCE FEEDBACK/INTERVIEW • Conducting of the 8 step, Human Touch interview/discussion – formally/informally and implementing Positive and Corrective performance feedback.
  36. 8-STEP HUMAN TOUCH PERFORMANCE INTERVIEW • Step 1: Control the environment • Step 2: State the purpose of the discussion • Step 3: Ask for the employee’s opinion • Step 4: Present your assessment • Step 5: Build on employee’s strengths • Step 6: Ask for employee’s reaction to your assessment • Step 7: Set specific goals • Step 8: Close the discussion
  37. PERFORMANCE DEVELOPMENT Implementing training and development and other people performance improvement initiatives The adoption of the 5 pivotal roles of people development-focused managers (people capitalism).
  38. PERFORMANCE REWARD • Offering of host of customized and personalized intrinsic and extrinsic performance reward options and recognition. Ensure compliance with best practice principles
  39. LEARNING ACTIVITY 2 • Group discussion Review the efficiency and effectiveness of the current performance management process in your organization. Identify gaps and recommend improvement strategies. Also discuss the key managerial actions in the 5-stage, performance management cycle. • Provide feedback in the form of summary
  41. CAUSES OF POOR PERFORMANCE Personal problems Skills/competence Lack of resources Organizational factors
  42. CAUSES OF POOR PERFORMANCE • Refer to the reading article, “7 Causes of Poor Employee Performance - And How to Address Them” (Bernard Marr) on pages 42-44
  44. LEARNING ACTIVITY 3 • Group discussion Identify the most common causes of poor performance in your organization. Develop pro- active strategies to prevent poor performance. Apply performance management principles to the four (4) quadrants of the Performance Matrix. • Provide feedback in the form of summary
  45. PERFORMANCE COUNSELING • Defining performance counseling • The purpose of performance counseling • The benefits of performance counseling • The characteristics of effective performance counseling • Characteristics of effective performance counselors • Performance counseling process
  46. THE CHARACTERISTICS OF EFFECTIVE PERFORMANCE COUNSELING • Purpose • Flexibility • Respect • Communication • Support
  47. CHARACTERISTICS OF EFFECTIVE PERFORMANCE COUNSELORS • Shows compassion • Listens attentively and actively • Honest and Trustworthy • Knowledgeable – content and process • Patient • Knows their limits and restrictions • Knows when and where to refer employees e.g. Employee wellness and/or Assistance programmes • Emotionally intelligent • Impartial and objective • Professional • Positive attitude and outlook
  48. LEARNING ACTIVITY 4 • Group discussion By referring to the purpose and value/benefits of performance counseling, build a business case for the value and impact thereof. By referring to the characteristics of performance counseling/counselor, develop a profile of an effective performance counselor in your working environment. • Provide feedback in the form of summary
  49. PERFORMANCE COUNSELING PROCESS • Preparing for a Performance Counseling session • Conducting a Performance Counseling session (Interview) • Performance Improvement Action Plan • Monitor, review and evaluate the effectiveness of the Performance Improvement Action Plan
  50. PREPARING FOR A PERFORMANCE COUNSELING SESSION • Review the performance standards, job description and operating manuals • Consultation and engagement • Start building a business case for employee poor performance • Schedule and notify the employee of the counselling session
  51. LEARNING ACTIVITY 5 • Group discussion As part of your preparation for a performance counseling session, develop a comprehensive checklist to ensure that you are adequate prepared. By referring to this preparation check-list, identify some of the common preparatory challenges/constraints in your organization. For each of these challenges, develop remediation strategies. • Provide feedback in the form of summary
  53. CONDUCTING A PERFORMANCE COUNSELING SESSION (INTERVIEW) • Directing, managing and controlling the interview (Process) • Jointly create and sign an FOSA agreement: Facts Objectives Solutions Actions • Topics (Content) to include in a counseling session • Post counselling actions
  55. LEARNING ACTIVITY 6 • Group discussion • By referring to the process as well as the content, develop a set of best practice principles for conducting an effective performance counseling interview/session. Process Content • Provide feedback in the form of summary
  56. PERFORMANCE IMPROVEMENT ACTION PLAN • Defining a Performance Improvement Plan • The value of developing a Performance Improvement Plan • Refer to the six items that a supervisor should review with the employee when using the document • Refer to the PIP template (pages 62-63)
  57. MONITOR, REVIEW AND EVALUATE THE EFFECTIVENESS OF THE PERFORMANCE IMPROVEMENT ACTION PLAN • After the session and throughout a sufficient time period, managers should evaluate the worker's progress to ensure the problem has been solved. • Managers need to decide on the following: M&E tools and techniques Frequency of review Disciplinary actions as a result of continuance of poor performance Reward actions when performance improvement occurs
  58. LEARNING ACTIVITY 7 • Role Play: Pair up with a learning partner and conduct a 15-minute role play scenario in which one learner plays the role of a supervisor and the other learner a poor performing subordinate. Record the performance improvement agreement by using the provided PIP template. Conduct a de-briefing session after the role play to determine the efficiency and effectiveness of the counseling process. Discuss the monitoring and evaluation tools that managers could use to periodically review employee performance improvement/s.
  59. INCAPACITY PROCEDURE • Differentiate between misconduct and poor performance – relevant examples • Schedule 8: Code of Good Practice (LRA): Fair reasons for dismissal Disciplinary measures short of dismissal Incapacity: Poor work performance
  60. INCAPACITY PROCEDURE: POOR PERFORMANCE • Given the employee appropriate evaluation, instruction, training, guidance or counseling and • After a reasonable period of time for improvement, the employee continues to perform unsatisfactorily • Conducting an investigation • The employee should have the right to be heard and to be assisted by a trade union representative or a fellow employee.
  61. GUIDELINES IN CASES OF DISMISSAL FOR POOR WORK PERFORMANCE • Whether or not the employee failed to meet a performance standard and • If the employee did not meet a required performance standard whether or not • The employee was aware, or could reasonably be expected to have been aware, of the required performance standard; • The employee was given a fair opportunity to meet the required performance standard; and • Dismissal was an appropriate sanction for not meeting the required performance standard
  62. LEARNING ACTIVITY 8 • Group discussion: By referring to Schedule 8 of the Code of Good Practice: Dismissal as well as your organizational policy and procedure, measure the current degree of compliance when exercising and managing poor performance. Identify the areas of non-compliance and develop remediation/improvement strategies for each of these areas.
  63. THE PURPOSE AND VALUE OF COACHING • Coaching often provides positive feedback about employee contributions. • Regular coaching brings performance issues to an employee's attention when they are minor, and assists the employee to correct them. • The goal of coaching is to work with the employee to solve performance problems and improve the work of the employee, the team, and the department. • Coaching offers the vehicle to accelerate employee development towards the achievement of individual and organizational effectiveness. • The core of coaching is building rapport, asking powerful questions and setting goals.
  64. DIFFERENTIATING BETWEEN MENTORING AND COACHING (CIPD) Mentoring Coaching Ongoing relationship that can last for a long period of time Relationship generally has a set duration Can be more informal and meetings can take place as and when the mentee needs some advice, guidance or support Generally more structured in nature and meetings are scheduled on a regular basis More long-term and takes a broader view of the person Short-term (sometimes time-bounded) and focused on specific development areas/issues Mentor is usually more experienced and qualified than the ‘mentee’. Often a senior person in the organization who can pass on knowledge, experience and open doors to otherwise out-of-reach opportunities Coaching is generally not performed on the basis that the coach needs to have direct experience of their client’s formal occupational role, unless the coaching is specific and skills- focused
  65. DIFFERENTIATING BETWEEN MENTORING AND COACHING (CIPD) Mentoring Coaching Focus is on career and personal development Focus is generally on development/issues at work Agenda is set by the mentee, with the mentor providing support and guidance to prepare them for future roles The agenda is focused on achieving specific, immediate goals Mentoring resolves more around developing the mentee professional Coaching revolves more around specific development areas/issues
  66. GUIDING PRINCIPLES OF EFFECTIVE COACHING • Strengthen communication between you and the employee • Help the employee attain performance objectives • Increase employee motivation and commitment • Maintain and increase the employee's self-esteem • Provide support
  67. BEST PRACTICE COACHING BEHAVIOURS • Focus on behaviour, not personality. • Ask the employee for help in problem identification and resolution. Use active listening to show you understand. • Set specific goals and maintain communication. • Use reinforcement techniques to shape behaviour.
  69. ELEMENTS OF AN EFFECTIVE COACHING SESSION • Coach when you want to focus attention on any specific aspect of the employee's performance. • Observe the employee's work and solicit feedback from others. • When performance is successful, take the time to understand why. • Advise the employee ahead of time on issues to be discussed. • Discuss alternative solutions. • Agree on action to be taken. • Schedule follow-up meeting(s) to measure results. • Recognize successes and improvements. • Document key elements of coaching session.
  70. STEPS OF THE SKILLS/TASK-ORIENTED COACHING PROCESS • Step 1: Needs/skills gap analysis • Step 2: Task analysis and explanation of task requirements • Step 3: Demonstrating/Presenting the task • Step 4: Trying out performance • Step 5: Assessment of learner’s competence • Step 6: Self Evaluation
  71. STEPS OF A PERFORMANCE-BASED COACHING SESSION (POSITIVE FEEDBACK) • Describe the positive performance result or work habit using specific details. • Solicit your employee's opinion of the same product or behaviour. • Ask the employee to identify elements that contributed to success • Discuss ways in which you and the employee can support continued positive results. • Reinforce for the employee the value of the work and how it fits in with the mission, vision, values and goals of the work unit or department. • Show your appreciation of the positive results and your confidence that the employee will continue to perform satisfactorily. • Document your discussion for the employee's file, as you would all coaching and counseling sessions, noting day, date, time and key elements.
  73. STEPS OF A PERFORMANCE-BASED COACHING SESSION (CONDUCT) • Describe in detail the poor work habit observed • Say why it concerns you. Tie it to the performance standards and goals. • Ask why it occurred and listen non-judgmentally to the explanation. Describe the need for change and ask for ideas. • Discuss each idea and offer your help • Agree on specific actions to be taken and set a specific follow-up date • Document results from the session
  74. STEPS OF A PERFORMANCE-BASED COACHING SESSION (CAPABILITY) • Describe the issue or problem, referring to specific behaviours • Involve the employee in the problem-solving process • Discuss causes of the problem • Identify and write down possible solutions • Decide on specific actions to be taken by each of you • Agree on a follow-up date • Document key elements of the session
  75. LEARNING ACTIVITY 9 • Group discussion: By referring to the best practice principles and guidelines, describe how you can apply coaching as a vehicle to performance improvement.
  76. CASE STUDY ANALYSIS • “Dealing with Poor Performance” • Refer to pages 62-65 • Response to questions 1-5 (page 66) • Provide feedback of answers
  77. CASE STUDY: DEALING WITH POOR PERFORMANCE • Questions • 1. Critically evaluate the proposed approach/procedure recommended by Elaine, the HR Manager, to David in addressing Carol’s poor performance. • 2. What are the likely causes of Carol’s poor performance? Differentiate between capability and conduct-related causes. What is the actual cause of Carol’s poor performance? • 3. Critically evaluate the performance counselling session conducted by David. • 4. What are the benefits of the approach adopted and applied by David in managing Carol’s poor performance? • 5. What post-counseling monitoring and evaluation measures has David proposed? Do you believe that these are effective? Motivate your answer.
  78. CONCLUSION • Key points • Summary • Questions • Certification
  79. CONTACT DETAILS • Charles Cotter • (+27) 84 562 9446 • • LinkedIn • Twitter: @Charles_Cotter •