COMMERCE ALTERNATIVE PERSONNEL SYSTEM (CAPS) PERFORMANCE MANAGEMENT WORKSHOP FOR MANAGERS
Pay for Performance System Key Questions What is a pay for performance system? What are the key drivers for a pay for performance system? What are the benefits of a pay for performance system? What can managers/supervisors do to make the pay for performance system a success?
Definition of a Pay for Performance System Pay for performance systems are systems in which pay decisions are based on defined performance levels rather than entitlement, tenure, or other non-performance related factors Pay decisions include: • Merit-based pay increases • Lump sum bonuses
Drivers of Pay for Performance Systems Pay for performance systems emphasize achieving greater individual and organizational performance results Need for more flexible compensation practices to Agency specific needs
Benefits of a Pay for Performance System Rewards high performers Allows greater flexibility for recruiting and hiring top talent Provides opportunities for developing poor performing employees Increases employee motivation Contributes to employee retention Deals more effectively with marginal employees
Pay for Performance Guidance Make the pay for performance process transparent • Managers/supervisors can ensure that employees are informed about the pay for performance system, understand how the system will impact them, and what employee and management roles and responsibilities are under the new system Provide training for managers/supervisors • While managers/supervisors cannot necessarily control the extent to which training is adequate, you can actively pursue information about the new system to make sure that you have the resources, tools, and skills needed to be successful
Pay for Performance Guidance Provide accurate assessments on employee performance • Ensure success of this system by providing honest, accurate assessments of employee performance based on articulated performance objectives and performance benchmark standards to truly distinguish employee performance Evaluate employees solely on performance elements • A responsibility to clearly articulate individual performance expectations to employees and to only evaluate them on those expectations
Understanding the CAPS Performance Appraisal Process Key Questions What is the performance appraisal process? What are the responsibilities of Rating Officials, Pay Pool Managers, and Employees? What other pay-related interventions (other than performance-based pay) are available to managers/supervisors to reward employees for good performance? How can managers/supervisors acclimate new employees to the performance appraisal process?
Intent of CAPS Performance Appraisal System Encourage high performance Encourage continuous dialogue between supervisors and employees Provide a basis for performance-related decisions (e.g., pay increases, bonuses, PIPs)
Performance Management 1. Planning Set goals and measures Establish and communicate elements and standards 2. Monitoring Measure performance Provide feedback Conduct progress review Five Key Components 5. Rewarding Recognize and reward good performance 3. Developing Address poor performance Improve good performance 4. Rating Summarize performance Assign the rating of record
Non-Monetary Ways to Reward Your Employees • Recognition • Acknowledge employee ideas • Acknowledge significant contributions in writing
Components of the CAPS Performance System Performance Indicators • “E” for Eligible, “N” for Not Eligible, “P” for Pending, or “U” for Unsatisfactory Performance Plans • Prepared by rating official with employee input • Approved by Pay Pool Manager • Critical elements only – minimum of 2/maximum of 6 Performance Standards • Benchmark standards • Supplemental standards Performance Scores • 100-point scale using benchmark standards
80 – 100 Benchmark Performance Standards 60 - 79 40 - 59 0 - 39
Summary Guidance for Benchmark Performance Standards • Assists managers in evaluating employees with benchmark performance standards • Used to help make distinctions between different levels of performance • Helps ensure greater consistency in the analysis and evaluation of performance ratings • Approved by the CAPS Board in 2005
Summary Guidance for Benchmark Performance Standards
Supplemental Standards • Defined in terms of results – “what” and “how” • Expressed in terms – • Quality • Quantity • Timeliness • Cost Effectiveness • Written at the “Eligible” Level • Use of Supplemental Standards is Optional
Responsibilities of Rating Officials Develop performance plan with employees Conduct progress reviews with employees Modify performance plan with employees as needed Conduct performance review meetings to discuss accomplishments Recommend ratings, scores, payouts, and bonuses to Pay Pool Manager through any intervening higher level supervisor(s) Conduct evaluation feedback meetings with employees
Responsibilities of Pay Pool Managers Pay Pool: A grouping of employees who are combined together for performance-based pay decisions Approve performance plan/plan modification Manage the pay pool Ensure consistency across rating officials Discuss with rating officials any discrepancies and/or the need for score adjustments Render final decision on ratings, scores, performance increases, and bonuses
Responsibilities of Employees Create performance plan with Rating Official Modify performance plan with Rating Official Clearly, concisely, and accurately document accomplishments over past year Seek out performance feedback throughout year Respond to performance feedback
Pay for Performance Flexibility Pay increases upon promotion • Managers/supervisors may recommend employee’s salary anywhere within the band when promoted. Minimum of 6% pay increase. Performance bonuses • Rewards high performers, with intent to motivate performance Supervisory performance pay • Managers/supervisors at band’s pay ceiling max may receive up to six percent higher through performance
Comparability Increases All employees will receive the annual comparability increase except: Employees with an “Unsatisfactory” rating Employees on a PIP at time of comparability increase • Employees on a PIP will receive comparability increase at the time they successfully complete a PIP • Payment of ACI not retroactive
Acclimating Employees to the Performance Appraisal Process Employees must have a clear understanding of performance expectations Employees will do well if they understand how performance is linked to success Feedback provides employees with an understanding of level of performance Employees want to understand if their performance is meeting management expectations
Managing and EvaluatingEmployee Performance Key Questions How can managers/supervisors identify the linkage between organizational goals and work unit/team goals and objectives? How can managers/supervisors help employees establish performance elements that are linked to organizational goals? How are performance plans created? How can managers/supervisors effectively evaluate performance?
Linking Individual Performance to Organizational Goals Identify overall organizational goals and discuss how they are linked to your work unit/team objectives Discuss the work unit/team objectives and/or specific products or services and how they are linked to performance plan critical elements Explain the rationale of how each critical element is weighted; the activities under each element; and the relationship of the elements to the work unit/team objectives
Components Of A Performance Plan ELEMENTS OBJECTIVES ACTIVITIES STANDARDS
Brainstorm Task List Consider the whole job Look to the coming year for new assignments, resources, priorities, policies Teamwork makes up part of the organization’s fabric: • Helping others work • Information sharing Use active verbs – e.g., manage, develop, plan, etc.
S M A R T Tips • SPECFIC • MEASURABLE • ATTAINABLE • RELEVANT • TIMEBOUND
Choose Measurements Quality Quantity Timeliness Resource/Cost
Effectively Evaluating and Documenting Employee Performance Provide employees with tips for writing a good accomplishment statement • Keep records of accomplishments during rating cycle • Summarize all accomplishments for the year by Critical Element • Do not understate or overstate accomplishments • Establish a format for accomplishment statements to maintain consistency and quality (e.g., bullets vs. narrative) • Discuss the desired format
Evaluating and Documenting Employee Performance Evaluate the employee’s performance • Accurately and objectively • Use specific language to describe key achievements or deficiencies (e.g. work examples, address the critical activities under each element, use positive wording when appropriate)
Rating Eligibility An Employee is Ratable if: • Occupies a covered position as of Sept 30 AND • Has worked at least 120 days in one or more covered positions An Employee is NOT Ratable if: • Does not meet conditions stated as Ratable • Employee has been placed on an approved Performance Improvement Plan (PIP)
Concept of Intervals Each pay band is divided into 5 intervals. Intervals 1-3 are for non-supervisory positions and intervals 4 & 5 are for supervisory positions. Pay progression potential is faster at lower pay bands and lower intervals in pay bands. Based on OPM statistical study of Federal employee occupational salary histories.
Intervals and Potential Pay Increases ILLUSTRATIVE
Payout Rules Highest scored employee receives highest relative percentage payout (% of %) Lower scored employees cannot receive a greater relative percentage payout Tied scores might not receive same relative percentage payout
Providing Effective Performance Feedback Key Questions How can feedback improve employee performance? What are strategies that managers/supervisors can use to provide effective feedback? What are the ramifications of providing inadequate, poor, or untimely performance feedback? What communication barriers may arise and what can managers/supervisors do to overcome them?
Performance Feedback Is An Ongoing Process Reviewing Work Conducting Progress Reviews and Annual Appraisals Addressing Performance Issues Maintaining open lines of communications
Performance Feedback Strategies Provide continuous constructive feedback Prepare the employee for the discussion in advance Be clear on the purpose of the meeting Have a clear message Be specific Emphasize the positive
Performance Feedback Strategies Be timely Focus on accomplishments Respect the individual Leave communication lines open
Consequences of Ineffective Feedback Employees may not focus on performance goals and expectations. Employees may lose motivation Employees may become disgruntled Low employee morale Unexpected turnover Grievances
Communication Barriers Communication styles Use of verbal and non-verbal language Lack of trust
Overcoming Communication Barriers Familiarize yourself with communication styles of your employees Understand what motivates your employees Become aware of your communication style and modify as necessary to be effective
Providing Feedback Establish a relaxed environment Engage in a 2-way dialogue Highlight positive or good behavior Keep the conversation focused on performance issues Maintain control of the conversation Offer constructive criticism
Providing Feedback Don’t be confrontational Don’t be accusatory Don’t only focus on faults or mistakes Don’t bring personal issues into the discussion Don’t become agitated or angry
Managing Marginal Performance Key Questions How can managers/supervisors successfully identify a marginal performer? How can managers/supervisors help marginal performers become high performing employees? What options do managers/supervisors have for managing marginal performance?
Identifying Marginal Performance Missed deadlines Decreased productivity Lack of dependability Lack of proficiency Failure to perform current work assignments
Understanding Causes of Marginal Performance Ask Yourself: What is it about the person’s performance that has a negative effect on the work being done? What are things I actually see and hear that indicate there is a problem? Does the employee know that there is a performance issue? Have I clearly communicated performance objectives and expectations ?
Understanding Causes of Marginal Performance What aspects of the employee’s performance needs to change in order to convince me that the employee has improved? Are there obstacles or barriers to the employee performing well (e.g. work environment, training)? Is the problem marginal performance or misconduct?
Marginal Performance The failure of an employee to do the job at an acceptable level. Misconduct The failure to follow a workplace rule (whether written or unwritten). Examples of misconduct include tardiness and absenteeism, insubordination, and failure to follow instructions.
Managing the Marginal Performer Address marginal performance early Document all evidence relating to that employee’s low performance level Schedule performance review meetings with the employee Be prepared to take appropriate action
Tips for the Meeting Avoid referring to the situation beyond the impact it has on the employee’s performance Engage the employee in the discussion to obtain their perspective on the matter Limit the discussion to job related issues