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PERFORMANCE MANAGEMENT

PERFORMANCE MANAGEMENT. A journey into the abyss of employee evaluations. WCU HR 698, Spring 2009 C. David Crouch Lindsay Handsel Ryan Mitchell Angela Trull Frank Wheeler. 1. Introduction.

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PERFORMANCE MANAGEMENT

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  1. PERFORMANCE MANAGEMENT A journey into the abyss of employee evaluations WCU HR 698, Spring 2009 C. David Crouch Lindsay Handsel Ryan Mitchell Angela Trull Frank Wheeler 1

  2. Introduction Our group chose “performance management” as our topic to explore. In that exploration process, we discovered that the topic itself is much too broad for this assignment. Realizing that there has been much research and data presented in relation to organizational and team performance management, i.e. balanced scorecards and the like, we chose to narrow our focus to performance management of employees, typically referred to as the employee evaluation process. This area carries with it much debate, confusion and frustration in American business. It seems though well engrained in American business, the employee evaluation process is questioned and viewed as non-valued by many. Why is that? Our group decided to investigate best practices and processes and explore any alternative perspectives we could find. We invite you to join us on a journey into the abyss of employee evaluations and the frustrations leaders face with this highly polemic issue. 2 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  3. Your Perception From the Zoomerang survey week of March 24, 2009 • 75% of you said the leaders in your organizations don’t like employee evaluations or are neutral to them • 92% of you said your leaders have only one conversation per year with their employees about their performance • 58% of you said your current system does not improve team or organizational outcomes • 83% of you said your leaders do not use the process on a daily basis to encourage desired performance 3 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  4. What’s good about it? According to you… • They don’t have to determine pay raises • It’s quick, easy and standardized • Requires leaders to have a conversation at least once/year with their employees about their performance • Determining future goals • Eval form guides them thru the process • First step in building a case against the employee 4 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  5. What’s bad about it? According to you… • Too time consuming • No consistency manager to manager • Employees don’t value it either • Forced bell curve of performance • Just more paperwork • Doesn’t accurately represent performance • No one pays attention to it • Too many to do 5 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  6. What would you change? • Remove the link to pay • Make it relate to pay • Require more frequent conversations • Reduce subjectivity • Stop holding people accountable for things they have no control over • Use a different rating scale • Use cameras periodically • Everything! 6 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  7. Generally speaking, You seem to be saying… • Our leaders and employees place little, if any, value on our own employee evaluation processes • Those processes do little to help us accomplish our team and organizational outcomes • Leaders don’t use the process on a daily basis to encourage desirable performance In other words, we seem to be wasting our time, and a lot of it! 7 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  8. What do others say? The importance of supervisors communicating to employees throughout the performance appraisal cycle with clarity and ensuring mutual understanding was emphasized in Salary.com's 2006 Performance Review Survey. The survey showed significant gaps between employer and employee views on performance management. For example: 82% of managers believe they provide clear goals to their employees prior to their formal performance review, but only 46% of employees say the same 83% of employers say that they include the input of their employees in the review process but only 43 % of employees feel their input is valued and included Nearly half of the 2,000 employees surveyed said their performance has at some time been reviewed against goals that were not previously communicated 8 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  9. Introduction It’s apparent there’s a problem with the way we attempt to manage performance in America. In our presentation, we’ll first define performance management and clarify its intended purpose and benefits. We’ll try to identify the elements of effective evaluation processes and then look at some of the problems. Finally, we’ll suggest alternative approaches that some believe are better than the current methods commonly in practice today. Join us now as we journey into the abyss of the employee evaluation process…. 9 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  10. Table of Contents • Performance management defined • The history of performance management • The purpose of performance management, why we do it & the underlying assumptions • Elements of an effective performance management system • Problems with performance management • Should evaluations be abolished altogether? • What could we do instead? • Unanswered questions & key take-aways • Conclusion 10 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  11. Performance Management Defined 11

  12. Performance Management Defined Performance Management, in its broadest context, deals with processes to manage performance at the organizational, team, and individual levels. For the purposes of this presentation, we have chosen to focus on the individual level, the employee evaluation process. The process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organization. 12 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  13. Performance Management Defined (cont.) An assessment of an employee, process, equipment or other factor to gaugeprogress toward predetermined goals. See also organizational development (OD), performance appraisal, application performance management (APM), business performance management (BPM), operational performancemanagement (OPM) “Simply put, performance management includes activities to ensure that goals are consistently being met in an effective and efficient manner.” HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  14. Performance Management at a Glance Managing performance is a critical focus of HR activity. Well-designed strategies to recognize and improve performance and focus individual effort can have a dramatic effect on bottom-line results. The problem is to determine what the processes, tools and delivery mechanisms are that will improve performance in your organization, as well as determine which ones are best avoided. Managing Performance will help you: - design performance management processes that reflect the context and nature of the organization; - create supportive delivery mechanisms for performance management; and - evaluate and continuously develop performance management strategies to reflect the changing business environment. (M. Armstrong and A. Baron) HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  15. The History of Performance Management 15

  16. History of Performance Management • Businesses began approximately 60 years ago to determine an employee’s wage based on performance. • Performance appraisal (PA) systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified. • Performance Management (PM) was used by employers to drive employee behaviors to achieve certain outcomes. For those driven by $, this worked well. For ones who were seeking development and training it failed to drive the desired behaviors. 16 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  17. History (cont’d) The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay raise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. It was felt that a cut in pay, or a raise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  18. History (cont’d) Early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence on Performance Appraisal as an attempt to drive desirable performance. HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  19. History(cont.) • Goal setting was futilely attempted (employees set goals low to ensure achievement, managers gave common ratings to employees to avoid upsetting individuals). • Employees were paid to work and not to think. • Gap between pay justification and skill development and knowledge widened. • Employees began to request pay increases. • In the 1980’s a more formalized approach was used and emphasis was placed on the Performance Appraisal as an attempt to drive desirable performance. HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  20. History(cont.) • Employee’s performance tended to accelerate shortly before the next PA. • In the 21st century, PA’s have been absorbed into PM. Talent Management, Career Management, MBO’s and differentiation of employee performance are common. • Evolved into an on-going process and not a one time or annual event. • Performance Management progressed from an HR policy firmly within the remit of the HR department to a business process that is central to aligning activity with strategic goals and is as much about managing the business as it is about directing people and controlling the flow of training or rewards. HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  21. The Purpose of Performance Management Why we do it Expected benefits Underlying assumptions 21

  22. Purpose of Performance Management • Linking people to performance and profits. • Drive improvement in business results through individual, group, organizational goal attainment, measurement, performance coaching and performance information sharing. • To drive org and individual capability development by role clarity, establishing an environment of constructive feedback through formal developmental coaching/mentoring. • Help employees understand what they should be doing, and how well they should be doing it. HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  23. Purpose of Performance Management (cont.) • Motivate and retain high performers by providing career development programs encompassing motivational and reward strategies, challenging work assignments and other on-the-job learning initiatives that will lead to career advancement and job satisfaction. • Helps prevent problems from occurring throughout the year and identify barriers to performance before they impact performance. • Improve future performance. • Helping people to do a great job. HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  24. Why do we do it? We believe it works. We believe we can accurately and objectively identify those employees whose performance is consistently above or below average. We believe that the individual’s performance contributes to the bottom line, for better or worse. Source: “The Leader’s Handbook,” by Peter Scholtes HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  25. Why do we do it? Our logic goes like this… There are good performers and bad performers. We can tell the good from the bad. Good performers make a positive contribution to the company. Bad performers are detrimental to the company’s performance. Performance appraisal serves to clarify an individual’s work responsibilities, align the worker with the organization’s goals, hold each worker accountable for their part, and motivate them to continuously improve. Source: “The Leader’s Handbook,” by Peter Scholtes HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  26. What are the expected benefits? Identifying and responding to outstanding performers Creating a basis for pay Providing feedback to individual employees Giving direction and focus to the workplace Identifying career goals Identifying education and training needs Identifying candidates for promotion Source: “The Leader’s Handbook,” by Peter Scholtes 26 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  27. What are the expected benefits? Identifying candidates for layoff Fostering communication between employees and their supervisors Creating a paper trail that will serve as a defense against suits for wrongful dismissal or other perceived unfair treatment Conforming to regulatory requirements Motivating employees Source: “The Leader’s Handbook,” by Peter Scholtes Go forward to “Debundle the Cart “ 27 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  28. Underlying Assumptions Evaluation will improve an employee’s performance The employee being evaluated has control over the results. The employee’s individual contribution can be discerned from the contributions of the system and other managers and workers in the system. All processes with seemingly identical equipment, materials, training, job descriptions, etc., are, in fact, identical. The standards of evaluation are related to factors demonstrably important to the business and its customers. Source: “The Leader’s Handbook,” by Peter Scholtes HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  29. Underlying Assumptions The standards are reasonable and achievable. Each system in which an employee works is stable and capable of delivering the expected results. The evaluation covers performance over the entire cycle of evaluation, not just the period recallable by recent memory. All evaluators are consistent with each other. Each evaluator is consistent from one employee to the next. Source: “The Leader’s Handbook,” by Peter Scholtes Go forward to “Unquestioned Premises” HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  30. The Elements of an Effective Performance Management System General practice Balanced measures Demings methodology Gallup’s best practices 30

  31. General Practice Effective employee performance management includes: • planning work and setting expectations, • continually monitoring performance, • developing the capacity to perform, • periodically rating performance in a summary fashion, and • rewarding good performance. HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  32. General Practice - individual level Using a Balanced Measures Approach affects employee performance management. Many of the best practices of balancing organizational measures cited significantly affect employee performance management methods and processes, including: • Cascading Accountability • Involving Employees • Keeping Employees Informed • Rewarding Employees HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  33. Balanced Organizational Measures Balancing measures is a strategic management system for achieving long-term goals. Organizations using a "family of measures" to create this balance consider the perspectives of their customers, stakeholders, and employees while achieving a specific mission or result. HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  34. Best practices for using balanced measures include: • establishing a results-oriented set of measures that balances business goals, customer needs and satisfaction, and employee involvement, development, and satisfaction with working conditions • establishing accountability at all levels of the organization, through leading by example, cascading accountability, and keeping everyone informed • collecting, using and analyzing performance data, which includes providing feedback • connecting performance management efforts to the organization's business plan and budget • sharing the leadership role, which strengthens the continuity of the performance management process despite changes in top management HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  35. Deming’s Methodology Common characteristics of performance appraisals Focus is on the individual’s work There are expectations or standards of performance Usually two sessions between employer and evaluator One to establish the standards, and Another to review performance Source: http://deming-network.org/files/tqmorpa.txt 35 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  36. Deming’s Methodology Common characteristics of performance appraisals Evaluator is usually the person who has line authority over the one evaluated Usually results in a written conclusion There are various consequences: Merit pay Determining promotability Basis for layoffs Source: http://deming-network.org/files/tqmorpa.txt 36 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  37. Deming’s Quality Systems Check Does your performance management process support these values: Customer focus Systems thinking Teamwork Process improvement Fact-based decision making using measurement How employees are treated, motivated and developed Source: http://learningvoyager.blogspot.com/2002/02/end-of-performance-reviews.htmlblog post by Terence Seaman 37 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  38. Gallup’s Best Practices From 20 years of research seeking the answer to the question “what do the world’s greatest managers do differently,” Gallup’s researchers have discerned a best practice in the area of performance management. The following information describes their detailed approach to high employee engagement through a process of communication and inquiry between manager and employee. Source: “First, Break All the Rules” by Marcus Buckingham of Gallup HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  39. Gallup’s Best Practices Define behavior outcome measurements that align to and drive team and organizational outcomes Differentiate between high and low performers Minimize rater bias in the measurements by including objectivity wherever possible Maximize employee responsibility and participation through education and self-evaluation Source: “First, Break All the Rules” by Marcus Buckingham of Gallup HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  40. Gallup’s Best Practices (con’t) Train leaders how to reinforce performance on a daily basis Connect with the employee at regular intervals throughout the performance year, at least quarterly Identify clearly defined standards that can be fairly and consistently applied across the organization for all job roles Provide a mechanism for integrating job specific performance measures Source: “First, Break All the Rules” by Marcus Buckingham of Gallup HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  41. Gallup’s Best Practices (cont’d) Focus on performance excellence instead of mediocrity or “minimum standards” Provide a valid, fair correlation to annual pay adjustments for those who desire “merit based pay systems” Source: “First, Break All the Rules” by Marcus Buckingham of Gallup HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  42. What great managers do Establish a simple routine void of the usual company-sponsored schemes Concentrate on what to say to each employee and how to say it Engage in frequent interaction between the manager and the employee…a minimum of once/quarter Focus on the future Employees keep track of their own performance and learning Source: “First, Break All the Rules” by Marcus Buckingham of Gallup, p 222-229 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  43. The Basic Routine At the beginning of the year, or a week or two after the person starts, spend an hour asking the following: What did you enjoy most about your previous work experience? What brought (keeps) you here? What do you think your strengths are? What are your weaknesses? What are your goals for your current role? (Ask for scores and timelines) Source: “First, Break All the Rules” by Marcus Buckingham of Gallup, p 222-229 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  44. The Basic Routine How often would you like to meet with me to discuss your progress? Are you the kind of person who will tell me how you’re feeling, or will I have to ask? Do you have any personal goals or commitment you would like to tell me about? What is the best praise you’ve ever received? What made it so good? Have you had any really productive partnerships or mentors? Why do you think these relationships worked so well for you? Source: “First, Break All the Rules” by Marcus Buckingham of Gallup, p 222-229 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  45. The Basic Routine What are your future growth goals, your career goals? Are there any particular skills you want to learn? Are there some specific challenges you want to experience? Is there anything else you want to talk about that might help us work well together? Source: “First, Break All the Rules” by Marcus Buckingham of Gallup, p 222-229 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  46. The Performance Planning Meetings Once/quarter, do the following… 10 minute focus on the past What actions have you taken? What discoveries have you made? What partnerships have you built? 50 minute focus on the future What is your main focus? What new discoveries are you planning? What new partnerships are you hoping to build? Source: “First, Break All the Rules” by Marcus Buckingham of Gallup, p 222-229 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  47. Career Discovery Questions Scatter these throughout the year How would you describe success in your current role? Can you measure it? What do you actually do that makes you as good as you are? What does this tell you about your skills, knowledge, and talents? Which part of your current role do you enjoy the most? Why? Source: “First, Break All the Rules” by Marcus Buckingham of Gallup, p 222-229 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  48. Career Discovery Questions Scatter these throughout the year Which part of your current role are you struggling with? What does this tell you about your skills, knowledge, and talent? What can we do to manage around this? What would be the perfect role for you? Why would you like it so much? Source: “First, Break All the Rules” by Marcus Buckingham of Gallup, p 222-229 HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

  49. Problems with Performance Management 49

  50. Our approach to the problem To gain insight into the problems with employee evaluations, we accessed these resources: Scholarly literature Practitioner literature Current online discussions with HR/OD/T&D professionals across the globe on www.LinkedIn.com in several discussion groups including SHRM, ODN, ISPI, ASTD, and T&D Current survey of leaders in healthcare Personal experiences of all the team members HR 698: Group 4: Crouch, Handsel, Mitchell, Trull, Wheeler

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