Performance reviews September 2014

September 2014

PERFORMANCE REVIEWS

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3 Introduction 4-5 Definitions 6-9 Benefits of performance reviews 8-9 Determining base pay and total earnings 10-11 Strategies around performance reviews 12-14 Creating a more effective pay-for-performance system for the public sector

15-17 Avoiding discrimination 18-20 Creating a valid and legally defensible pay-for-performance plan 21-22 Defining job performance and the creation of a performance review

instrument 23-24 Areas to consider when setting objectives 25-27 Improving the level of employee buy-in 28-30 Factors which support alignment of objectives 31-32 Rating errors 33-34 Forced distribution 35-36 Graphic rating scale for work quantity 37-39 Ratings and reviews 40-41 Where HR goes wrong with performance reviews 42-44 Criticisms of annual performance reviews 45-50 Replacing the annual performance review 51 Summary and questions

Agenda

Toronto Training & HR Inc. is a specialist training and human resources consultancy headed by Timothy Holden

10 years in banking15 years in training and human

resourcesFreelance practitioner since 2006

The core services provided by Toronto Training & HR are:

Training event designTraining event deliveryHR support with an emphasis on

reducing costs, saving time plus improving employee engagement and morale

Assistance for job seekers

Introduction to Toronto Training and Human Resources Inc.

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DEFINITIONS

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Performance reviewAppraisal

Purposes of a performance review

Definitions

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BENEFITS OF PERFORMANCE REVIEWS

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Employee participation is an effective tool for enhancing job-related autonomy, a necessary precondition for employee growthPerformance review participation provides employees with a voice into the performance review process-if employees are confident in the fairness of the performance review process, they are more likely to accept performance ratings, even adverse ones

Benefits of performance reviews 1 of 3

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Employees possess valid, unique, and relevant performance information that is unavailable or unobservable by the rater, therefore the quality, quantity, accuracy and validity of performance review information increasesEmployee ownership in the process provides a personal stake in the success of the system, enhancing employee acceptance

Benefits of performance reviews 2 of 3

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Employee participation generates an atmosphere of co-operation and employee support

Benefits of performance reviews 3 of 3

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STRATEGIES AROUND PERFORMANCE REVIEWS

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Strategies around performance reviews

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High performance, low attitude

High performance, high attitude

Low performance, low attitude

Low performance, high attitude

CREATING A MORE EFFECTIVE PAY-FOR-PERFOMANCE SYSTEM FOR THE PUBLIC SECTOR

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Identify a systematic procedure for creating performance review instrumentsDescribe the appropriate training for those conducting a performance review interview

Creating a more effective pay-for-performance system for the public sector 1 of 2

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Implement performance reviews using the developed instruments and performance interview/review training Evaluate employee attitudes towards the newly developed system

Creating a more effective pay-for-performance system for the public sector 2 of 2

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AVOIDING DISCRIMINATION

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Questions to askDo members of a protected group receive disproportionately lower ratings than others? Do members of a protected group receive disproportionately more low ratings than others? Or fewer high ratings?

Avoiding discrimination 1 of 2

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Questions to ask (continued)Does membership in a protected group predict one’s performance ratings? Do performance ratings explain race, gender or age disparities in pay or promotions?Is the performance management system effective?

Avoiding discrimination 2 of 2

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CREATING A VALID AND LEGALLY DEFENSIBLE PAY-FOR-PERFORMANCE PLAN

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A definition of job specific performance that leads to the creation of a performance review document that clearly outlines low to high performance measuresA well-conducted performance review interview process

Creating a valid and legally defensible pay-for-performance plan 1 of 2

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Equitable decisions regarding the amount of merit increases that will be given for different levels of performance

Creating a valid and legally defensible pay-for-performance plan 2 of 2

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DEFINING JOB PERFORMANCE AND THE CREATION OF A PERFORMANCE REVIEW INSTRUMENT

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Job analysisRating of tasksCreation of the performance review Identifying ratersRater trainingPerformance review interview

Defining job performance and the creation of a performance review instrument

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AREAS TO CONSIDER WHEN SETTING OBJECTIVES

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AutonomyMasteryPurpose

Areas to consider when setting objectives

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IMPROVING THE LEVEL OF EMPLOYEE BUY-IN

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What can employees gain?SMART objectivesDocumenting evidenceStrengthsAreas for improvementActive listeningWhen disagreement occursWhen needs are not being metCoaching managers

Improving the level of employee buy-in 1 of 2

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Obstacles and how to overcome themSymmetry

Improving the level of employee buy-in 2 of 2

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FACTORS WHICH SUPPORT ALIGNMENT OF OBJECTIVES

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What does the alignment of objectives involve ?

Climate fitCommunicationLeadership supportManagement guidanceStrategic plan characteristicsStrategic plan level

Factors which support alignment of objectives 1 of 2

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Plan alignmentEmployee alignment

Factors which support alignment of objectives 2 of 2

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RATING ERRORS

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Halo and hornsLeniencyStrictnessCentral tendencyPrimacyRecencyContrast effects

Rating errors Slide 32

FORCED DISTRIBUTIONSlide 33

Forced distributionSlide 34

GRAPHIC RATING SCALE FOR WORK QUANTITY

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Graphic rating scale for work quantity

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RATINGS AND REVIEWS

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RatingsCategoricalOverallPreliminary v finalMidyear v annual

Ratings and reviews 1 of 2

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ReviewsManagerDepartment360

Ratings and reviews 2 of 2

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WHERE HR GOES WRONG WITH PERFORMANCE REVIEWS

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No-one comes out of them any wiserToo much focus on the what and not the howEmployees feel disengaged as there is too much them and usObjectives aren’t clearly definedThere’s never any praise

Where HR goes wrong with performance reviews

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CRITICISMS OF ANNUAL PERFORMANCE REVIEWS

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Employees need and want regular feedback (daily, weekly), so a once-a-year review is not only too late but often a surpriseManagers can’t judge an entire year of work from an individual, so the annual review is awkwardWe usually have many peers and managers, so one person can’t adequately rate you without peer input

Criticisms of annual performance reviews 1 of 2

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Issues with people who are a poor fit and perform poorly should be addressed immediatelyPeople are inspired and motivated by constructive feedback—and the performance review process works against thisThe development part of a performance review conversation—what can be done to improve performance and engagement—is often ignored or depreciated

Criticisms of annual performance reviews 2 of 2

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REPLACING THE ANNUAL PERFORMANCE REVIEW

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Develop a feedback-rich culture and tools (online, formal and informal) that encourage all employees to give each other feedbackSeparate discussions about performance from discussions about potential, pay raises, and future career plansAssume that employees know about their strengths, weaknesses, and performance, and ask them to self-assess and share it with you

Replacing the annual performance review 1 of 5

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Enable managers to assess performance and give their people feedback regularly-as you do this, it gets easier and employees appreciate itFocus managers on hiring the best and building a team of high performers-rather than assume that 20% of your people will perform poorly, spend more time on assessment, culture, and fit to ensure low performers aren’t hired in the first place

Replacing the annual performance review 2 of 5

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Assume everyone wants to succeed, so if they aren’t performing well it’s not necessarily their fault—you should help them find a better fit so set and evaluate objectives frequentlyBeware of pay for performance plans (these tend to create perverse behaviour, as people focus on their objectives at the expense of the organization); in sales, pay for performance can work well; but in other roles it can cause problems

Replacing the annual performance review 3 of 5

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Give your managers a strong cultural framework and set of values to hire and manage from-this makes selection easier and enables you to evaluate and coach people more effectivelyInvest in leadership development-most managers struggle with selection, hiring, training, coaching, and evaluation

Replacing the annual performance review 4 of 5

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Provide managers with time and tools to learn, a framework for feedback, and continuous development so they become betterReward talent production not talent hoarding-if you pay managers to produce output, they’ll focus on talent performance and evaluation Use talent production metrics to evaluate leaders, forcing reviews to move toward coaching/development

Replacing the annual performance review 5 of 5

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SUMMARY AND QUESTIONS

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