Performance Management Andre O’Callaghan October 2008

1. Performance Management Andre O’Callaghan October 2008

2. Introduction • Since my last report, this employee has reached rock bottom and shows signs of starting to dig. • I would not allow this employee to breed. • Works well under constant supervision and cornered like a rat in a trap.

3. Introduction • He sets low personal standards and then consistently fails to achieve them. • This associate is really not so much of a has-been, but more of a definitely won’t be.

4. Some Perspectives • 85% have a PMS • 95% have strong commitment of the CEO • 94% have a formal communication strategy • 51% believe employees & managers are adequately educated & trained in PMS

5. Some Perspectives • 37% use the balanced scorecard methodology • 86% allows joint target setting • 91% have clear PMS policies, procedures and systems • Most companies measure performance using hard and soft measures • 2001 Deloitte & Touche HCC Survey

6. Define Performance Management • What is Performance Management? If 85% of companies apply it, what do they actually do? • Group Discussion

7. Define Performance Management • The process of ensuring individual and team effort support the organisational objectives and to realise key stakeholder expectations and wealth creation in all the identified value drivers of the organisation.

8. Define Performance Management • Planning is crucial • Stakeholder expectations are key drivers • Management and employee buy-in and involvement are paramount • Must be linked to and alignment with strategy

9. Process • Planning Performance • Maintaining Performance • Reviewing Performance • Rewarding of Performance

10. Planning Performance: • Setting objectives • Outlining development plans • Getting commitment • Reward Performance: • Link to pay • Results = performance PERFORMANCE MANAGEMENT PROCESS • Reviewing Performance: • Formal reviews • Assess against objectives • Maintaining Performance: • Monitoring performance • Coaching • Feedback Business strategy, stakeholders, key economic wealth drivers A Model

11. Planning • 80% of the process • Includes: • Identifying key value drivers of stakeholders • Defining Key Performance Areas (KPA’s) • Defining Objectives • Defining Targets • Develop a training and development plan

12. The Challenge of Alignment • With no harbour, no wind will be the right wind. • Between 92 to 97% of companies have a vision and some strategy statement. • Only between 3-7% of staff know and work by it.

13. ORGANISATIONAL LEVEL INDIVIDUAL LEVEL Deriving key value drivers from Strategic direction and KPA’S Determining and assigning KPA’s Determining organisational objectives Determining and assigning individual objectives Execution Measuring & Evaluating performance against organisational objectives Measuring, evaluating and rewarding Performance against individual objectives Reassessing and adjusting business strategy Reassessing KPA’s and adjusting Objectives to reinforce strategy Review A Model for Establishing/ Building an Aligned Performance Management Process

14. Setting Objectives • S = Specific • M = Measurable • A = Agreed/Attainable • R = Realistic / Relevant • T = Time-bound

15. Setting Objectives • A measurable component with a beginning and an end • Starts with a VERB • Not in isolation

16. The Measurement • Use a good-practice rating scale • Evidence-based • Both managers and employees - active participants • Mutually agreed • Usually – bell curve

17. Benefits • Integration • Open Communication • Improved Performance • Training and Development • Clarity of Standards/Requirements • Placement of Individuals

18. Benefits • Increased Objectivity • Remuneration • Promotability • Career planning

19. Feedback Training Reward & Compensation Review Process Process Design Competencies GoalSetting Strategy Focus Success Factors Implementation • If you are not managing performance, what are you managing? • Some key building blocks

20. Success Factors Implementation • Relevance • Reliability • Discriminability • Freedom from contamination • Practicality • Acceptability • Legal compliance

21. Coaching • Coaching & mentoring are crucial components of the Maintaining of Performance Phase • Reward Performance: • Link to pay • Results = performance • Planning Performance: • Setting objectives • Outlining development plans • Getting commitment PERFORMANCE MANAGEMENT PROCESS • Reviewing Performance: • Formal reviews • Assess against objectives • Maintaining Performance: • Monitoring performance • Coaching • Feedback Business strategy, stakeholders, key economic wealth drivers

22. Coaching • Coaching is a formal process: • - A day- to-day process • - To improve performance and capabilities • Coaching = Give a man a fish a day, and you fed him for a day; teach him to fish, and you feed him for life. • Confucius

23. Coaching • Give feedback • Ask for ideas and suggestions • Discuss • Coaching provides immediate feedback on performance

24. Coaching Coaching vs Mentoring vs Counselling vs Discipline?

25. Why do Managers Fail to Give Feedback? Group Discussion

26. Why do Managers Fail to Give Feedback? • Lack of confidence • Avoiding confrontation • Do not have time • Lacking internal support • Others?

27. A Model for Performance THE BECKS MODEL • Behaviour • Environment • Clarity • Knowledge/Skills

28. Good feedback is … • Descriptive and specific • About something that can be changed • Timeous • Tactful • Confirmed

29. Childhood and Feedback • What will other people think? • If you cannot say anything nice, do not say anything.

30. Impact on Feedback

31. Feedback and Generations Traditionalists Baby Boomers Generation X Millennials

32. The ECC Model for Feedback Example Be specific and give actual examples Effect Explain the impact/effect (positive or negative) Change Suggest what should change (to improve performance) Continue Recognise good performance (reinforce positive behaviour)

33. Good Performance Feedback – An Example Example During the last two weeks you made a significant contribution to the customer service targets – you had no complaints and your turn-around time is 6% above target. On Friday you also made a good suggestion to improve customer service in the front-office area. Effect We are doing great and we had very positive customer feedback in your area because of your inputs and efforts. Continue To focus on customer service and to share ideas around service excellence.

34. Good Performance Feedback – An Example Example During the last two weeks you had 5 serious complaints from 3 important customers regarding follow-ups. You also did not meet the required 5 hour-turn-around time on queries. Effect We are under pressure from 3 major clients who represent a substantial revenue base. Your area is not meeting the required service standard. Your team members are frustrated, because they meet target, but overall the team is below target. Change You will have to focus more on service and customer satisfaction and need to achieve an overall target of X% customer satisfaction for the next three months in order to meet target at the end of the quarter.

35. A Good Review Welcome Check expectations & concerns Give feedback and use Facts Get a Response Ensure buy-in and understanding Discuss and plan the next period Identify training requirements Express confidence

36. Performance Audits Key Topics • What do you audit? • How do you audit Performance Management? • What can you expect?

37. Performance and Reward Measures give rewards relevance, and rewards give measures meaning TB Wilson

38. Performance and Reward • What gets measured gets done • What gets rewarded is sustained • The majority of workers want recognition for achievement • Rewards have a high retention value for talent

39. Drivers Attraction & Retention of Talent

40. Performance and Reward Dilemma’s in reward: • Objectivity • Transparency • Affordability • Baggage

41. Link to Pay Why does it often fail? • Lack of objective and quantitative measures • Poor link between pay and performance (no immediate reinforcement) • The aspects that get rewarded are not linked to strategy • Poor communication re objectives, benefits and procedures

42. Link to Pay Why does it often fail? • Level of reward not proportionate to effort • Resistance to change • Union perceptions and involvement

43. Performance and Reward A Reward Matrix

44. Performance and Reward REMUNERATIONCOMPONENT: Performance Attract Retain Skills • Guaranteed Package • Short-Term Incentives • Long-Term Incentives X X X XX X X X

45. The Psychology of Incentives KEY IMPACT KEY OBJECTIVE SECONDARY OBJECTIVES • Internal Equity • Cost Management • Flexibility Hygiene Factors Competitive in Market Fixed Package • Return on Bottom Line • Reward specific behaviour/results Variable Package Drive Behaviour Motivational

46. What is Talent? Talented individuals are mobile monopolies with global passports Ridderstrale & Nordstrom

47. What is Talent? • Expected to produce superior performance • Talent apply knowledge, skills and creativity • Focus on personal growth • Challenge: To spot talent

48. Why is it important? PERFORMANCE PROFIT PASSION POTENTIAL

49. Review Key Elements

50. Desired performance Measurement Vision Mission Strategy Value Drivers Actual performance Development Link to Training & Development