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Appraising Auditor Performance: Strategies and Lessons Learned

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Title: Appraising Auditor Performance: Strategies and Lessons Learned


1
Appraising Auditor Performance Strategies and
Lessons Learned
  • Susan Cohen, City Auditor
  • City of Seattle
  • May 12, 2004

2
Agenda
  • Reflecting on performance appraisal experiences
  • Lessons learned about performance appraisals
  • Dealing with performance appraisals and other
    difficult conversations

3
Credit
  • Wilson, Thomas B. Innovative Reward Systems For
    the Changing Workplace McGraw-Hill, New York 1994

4
Definition
  • A PERFORMANCE APPRAISAL IS
  • One of those special human encounters where the
    manager gets no sleep the night before, and the
    employee gets no sleep the night after.
  • --Thomas B. Wilson

5
Appraising vs. Managing Performance
  • Appraising
  • Limited (annual) feedback
  • Artificial rewards
  • Managing
  • Continuous management review
  • Active and appropriate reinforcement

6
What Do We Want?
  • Managers Ability to recognize and reward
    superior performers.
  • Employees Honest and timely feedback, specific
    development, and an opportunity to receive
    effective coaching.
  • Compensation Managers To ensure that dollars
    are allocated according to performance levels.
  • Human Resource Executives Ability to identify
    top performers, plan for their development and
    succession, and reward them adequately.

7
What the Experts Say
  • Quality management gurus (Deming, Juran) argue
    that appraisals should be eliminated because
    they
  • Inaccurately portray individual performance as a
    major impact on results
  • Inadequately address system-based issues.

8
Did You Know?
  • At least two dozen studies over the last three
    decades conclusively documented that people who
    expect a reward for completing a task, or for
    doing that task successfully, simply do not
    perform as well as those who expect no reward at
    all.
  • --Harry Levinson

9
Rewards or Punishment?
  • Pay is not a motivator
  • Rewards have a punitive effect because they are
    manipulative
  • Not receiving an expected reward is also
    indistinguishable from being punished.
  • Rewards rupture relationships
  • Rewards undermine interest because artificial
    incentive cannot match intrinsic motivation

10
Goals for Appraisal System 1
  • Providing staff with information designed to
    maximize their individual potential and
    contributions to the agency
  • Providing management with information needed to
    recognize and reward top performers
  • Providing information and documentation needed
    to deal with poor performers

11
Goals for Appraisal System 2
  • Feedback to auditors
  • How to improve skills and personal qualities
  • Effective utilization of resources

12
Goals for Appraisal System 3
  • Provide employees with feedback to improve
    performance
  • Provide basis for allocating pay
    increases/incentive awards
  • Focus training and development activities
  • Identify candidates for promotion
  • Create an opportunity for employees to receive
    recognition
  • Assure adequate documentation of performance
    that satisfies the requirements of the 1964 Civil
    Rights Act and EEO Commission guidelines
  • Improve communication between managers and
    employees
  • Establish performance goals and standards for
    the next performance period

13
Goals for Appraisal System 4
  • Reinforce collaboration, teamwork, and a focus
    on the priorities of the business

14
Overarching Goal
  • To create and promote a workforce that can
    achieve the organizations mission to provide the
    most value to its stakeholders

15
Evaluation Criteria 1
  • Planning
  • Data Gathering and Documentation
  • Data Analysis
  • Written Communication
  • Oral Communication
  • Working Relations
  • Supervision

16
Evaluation Criteria 2
  • Achieving Results
  • Maintaining Client and Customer Focus
  • Developing People
  • Thinking Critically
  • Improving Professional Competence
  • Collaborating with Others
  • Presenting Information Orally and in Writing
  • Facilitating and Implementing Change
  • Representing the Organization
  • Investing Resources
  • Leading Others

17
Evaluation Criteria 3
  • Amount of Work
  • Quality of Work
  • Auditor Knowledge
  • Problem-Solving Ability
  • Communications Effectiveness
  • Ability to Follow Instructions
  • Planning Skills
  • Relationships

18
Remember Myers-Briggs
  • Anyone who supervises someone else should
  • --Look carefully at the assumptions made about
    motivation.
  • --Assess the degree to which carrot-and-stick
    assumptions influence own attitudes.
  • --Harry Levinson

19
Various Scales
  • Scale 1
  • Meets Expectations
  • Exceeds Expectations
  • Role Model
  • Below Expectations
  • Scale 2
  • Pass
  • Fail
  • Scale 3
  • Unacceptable
  • Needs Improvements
  • Fully Successful
  • Exceeds Fully Successful
  • Outstanding
  • Scale 4
  • No scale--qualitative information only

20
Typical vs. Ideal System
  • Highly subjective process
  • Unilateral from bosss perspective
  • Little focus on future capacity
  • Uncertain link to business success drivers
  • Explicitly defined process
  • Mutually understood
  • Strong development focus
  • Grounded in business success drivers

21
New Practices
  • Pass/fail systems rather than individual
    performance ratings, or no ratings at all
  • Peer review systems rather than manager-driven
    systems
  • Using review periods as a means to counsel
    employees on career and promotional opportunities
  • Minimizing the relationship between performance
    and pay raises

22
Why Appraisal Systems Fail
  • Managers lack sufficient information to judge
    performance accurately
  • The goals and standards are unclear and
    subjective
  • Employees become defensive
  • The process is not taken seriously
  • Managers do not prepare adequately

23
SMART
  • Specific
  • Meaningful
  • Achievable
  • Reliable
  • Timely

24
Legal Considerations
  • Personnel laws and court cases have established
    requirements for performance appraisals
  • --Performance measures must relate directly to
    the job
  • --Evaluations must be based solely on job
    criteria
  • --Results of evaluations must serve as the basis
    for making decisions (e.g., salary, training,
    promoting, layoffs, and terminations)
  • --Performance appraisals must be conducted at
    least once a year
  • (Civil Rights Act, Bito v Zia Company, Griggs v
    Duke Power, Wade v Miss.)

25
Employee Considerations
  • Clear sense of direction
  • Opportunity to participate in goal-setting
  • Timely, honest, and meaningful feedback
  • Immediate, meaningful, and sincere reinforcement
    of efforts
  • Coaching and assistance to improve job
    performance
  • Fair and respectful treatment
  • Opportunity to understand and influence decisions

26
Susans Favorite Quote
  • If people do not participate in and own the
    solution to the problems or agree to the
    decision, implementation will be halfhearted at
    best, probably misunderstood, and more likely
    than not fail.
  • --Michael Doyle in forward to Kaner, Sam
    Facilitators Guide to Participatory Decision
    Making New Society Publishers, Gabriola Island,
    BC 1996

27
  • Performance Management
  • Instead of
  • Performance Appraisals

28
Performance Management
  • Communicate the organizations mission,
    strategies, and performance goals
  • Establish performance measures to reflect both
    quantitative and qualitative elements.
  • Identify goals that balance short-term results
    with longer-term success indicators
  • Ensure that employees throughout the audit
    function understand the organization's goals

29
Performance Management (cont.)
  • Foster employee involvement in goal-setting
    process
  • Provide training to managers and employees on
    giving and receiving feedback
  • Designate manager to serve as mentor and assist
    employees in using feedback for performance
    improvements
  • Provide training for employees to strengthen
    performance and advance career

30
Feedback
  • Feedback should be related to meaningful
    consequence
  • Quantitative assessments valued more than
    narrative or subjective assessments
  • Public displays for group results and private
    meetings for individual feedback
  • Daily, weekly or biweekly feedback is valued more
    than annual feedback
  • Self-assessments have little value as an
    objective and meaningful source

31
Five Stages of Difficult Conversations
  • Prepare
  • Imagine resolution
  • Initiate conversation
  • Explore their story, then yours
  • Collaborate on resolution

32
Stage 1 Prepare
  • Consider your objectives and approach
  • Coach yourself to accept multiple outcomes
  • Focus on your purpose in initiating the
    conversation
  • Adopt a positive mindset (see next slide)

33
Choose a Positive Context
  • When a conflict is framed in a negative context,
    the focus is on power, and will likely result in
    a winner and a loser.
  • If a hammer is the only tool you have,
    everything looks like a nail.

34
Stage 2 Imagine Resolution
  • Relationship will improve as a result of
    conversation
  • Remain open-minded rather than advocate for a
    specific solution
  • Believe that a mutually acceptable solution can
    be achieved

35
Stage 3 Initiate Conversation
  • Invite conversation and share your purpose
  • Key practice describe the issue/problem as a
    difference in perspective
  • Avoid problem solving during initial stage of
    conversation
  • Acknowledge feelings that are frequently core
    issues, before attempting to solve stated problems

36
Stage 4 Explore Their Story-- Then Yours
  • Start with their story
  • Dont assume that you know their story
  • Dont push backListening does not imply
    agreement
  • Express your views and feelings after their story
    is finished

37
Your Story
  • Start with the most important points
  • State what you mean clearly to avoid assumptions
  • Share how you formed conclusions
  • Avoid words like never or always or fault
  • Present your story as your truth not the truth

38
Stage 5 Collaborate on Resolution
  • Invite the other person to help identify
    solutions
  • Invite the other person to come back if attempted
    resolution is not successful
  • Remain hopeful that mutually acceptable solution
    is possible
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