Strategic Links: Aligning Organizational Culture, Business Strategies and Performance Management

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Strategic Links Aligning Organizational
Culture, Business Strategies and Performance
Management

• Idealist.org
• National Nonprofit Human Resources Conference
• Portland, Oregon
• June 4, 2004
• 1030 a.m. to 1200 noon

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Why Implement Performance Evaluations?

• Theyve been used at every organization Ive ever
  worked.
• To substantiate differences in pay increases
  and/or personnel actions.
• To promote behaviors that are aligned with our
  organizational values and culture.
• To establish, monitor and assess achievement of
  work activities that support our strategic plan.
• All or several of the above.

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What Results Are You Getting From Performance
Evaluations?

• Weve gone through the annual torture-fest
  all for a lousy 3 raise!
• My boss must be getting ready to fire me all
  she talked about was every little mistake I made
  this year.
• I had a really productive discussion with my
  boss about the things I do well, some new
  projects Ill take on and some training to help
  build my technical ability.

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Objectives of An EffectivePerformance Management
System

• Stimulates productivity by establishing clear
  performance standards and priorities at the
  beginning of the performance cycle
• Promotes good employee relations by providing
  opportunities for timely feedback
• Strengthens supervisors ability to manage staff
  by giving a rational, objective basis for
  evaluating performance and encouraging them to
  identify ways to improve future performance

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Performance Management System Model

• Performance Planning
• Establish and define
• Key responsibilities
• Objectives
• Expected outcomes
• Priorities
• Behavioral factors

• Performance Monitoring
• Timely, relevant feedback
• Maintain log
• Mid-Year review
• Refine responsibilities/objectives
• Revisit priorities

• Development Follow Up
• Identify interests and needs to enhance
  performance
• Establish training plan
• Review job description
• Identify new challenges

• Performance Appraisal
• Compile/review data
• Request self-appraisal
• Prepare draft appraisal
• Review with next-level supervisor
• Finalize appraisal
• Meet with employee

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Essential Design Considerations

• What does your organization do?
• What goods or services are produced?
• What kinds of people do you hire?
• Can/Do you measure progress or achievement?
• What does your organization value?
• Individual contributions to the strategic plan?
• Quality of internal interactions?
• Nature and quality of external interactions?
• What is level of organizational commitment?

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Do Revenue Streams Matter?

• Fixed funding sources government contracts,
  grants, fees-for-service
• Charitable contributions individual donations,
  corporate underwriting, events
• Provision of goods and/or services program
  delivery, educational services, memberships, etc.
• Varied sources combinations of the above

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Timing of Annual Reviews

• Anniversary Date
• Each employee reviewed around anniversary of
  employment/promotion
• Common Review Date
• All employees reviewed after year-end program and
  financial results are in

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Anniversary Date

• Advantages
• Each employees performance is reviewed on an
  individual basis
• Supervisor better able to focus on individual
  accomplishments and development needs
• Payroll increases are spread out over the year,
  reducing the impact of a single jump in salaries
  on cash flow
• Disadvantages
• Ratings may be influenced by temporary up- or
  downswings in program or fiscal results
• May not establish clear link between individual
  and organizational performance

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Common Review Date

• Advantages
• All employees evaluated on overall achievement of
  program, operational or fiscal results
• Provides consistent basis for comparing
  contributions of individual employees in relation
  to others
• Less of an administrative burden on managers and
  HR, and increases can be based on year-end fiscal
  results
• Disadvantages
• Time required of supervisors to complete several
  appraisals at the same time
• Individualized coaching or development
  opportunity may be lost in shuffle
• Cash flow impact can be significant when all
  increases occur simultaneously

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Weighting Goals

• Provides employee and supervisor with common
  understanding of which are most important to
  success
• Helps in monitoring activities that are critical
  to organizational goals
• Priorities may change during course of the year

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How Many Rating Levels To Use
The number of ratings you use can vary, depending
on your organizations culture and the kinds of
performance you evaluate.

• Four (or More)
• Focus more on tangible results produced
• Supervisors are comfortable using consistent,
  clearly-defined criteria to note variances in
  employee performance.

• Fewer than Four
• Focus on behavioral factors and interactions
  soft results.
• Supervisors have difficulty identifying criteria
  for noting variances in performance among
  employees.

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Numeric Rating Levels

• Generally used to calculate points scored for
  each activity or behavior
• Often uses numeric weight to establish relative
  priority
• Establishes range of points associated with
  overall performance ratings

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Example
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Lettered Rating Levels

• Uses letter(s) to denote rating level for each
  area of performance evaluated
• Priority or weight can be described as
  percentage or by narrative descriptor
• Supervisor counts up ratings given to each
  activity and behavior factor and determines
  average overall rating.

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Example
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Sample Organization 1

• Small social service agency
• Employs primarily caseworkers and administrative
  staff
• Revenues generated primarily by government
  funding and limited fees-for-service
• Success measured by quality of interactions and
  numbers of clients served
• Culture is egalitarian were all in this
  together
• Everyone gets common annual increase

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Sample Construct 1
Job Description Provides basis for establishing
activities
Agency Values Provides basis for determining
desired behaviors

• Performance Plan
• Establishes expectations for performance
  throughout the year
• Provides qualitative basis for annual performance
  appraisal

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Sample Construct 1 (Continued)

• Annual Appraisal Design Will Include
• Assessment of quality of activities and desired
  behaviors
• Summary of strengths and areas to be enhanced
• 3 rating levels
• Usually exceeds expectations
• Fully meets expectations
• Partially meets expectations
• Common annual increase, if performance is at
  meets expectations level or better

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Sample Organization 2

• Mid-sized educational service organization
• Employs varied staff curriculum developers,
  trainers/ program delivery staff, marketers,
  customer support representatives and
  administrative/operational staff
• Revenues generated by combinations of government
  contracts, foundation/corporate funding and sales
  of services with emphasis on expanding sales
  revenue
• Success measured by quality of programs,
  increased numbers of programs delivered, sales
  revenue and client development and retention
• Culture is results-oriented, with all departments
  having clear understanding of how they support
  achievement
• Annual increases based on individual performance

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Sample Construct 2
Job Description Provides basis for establishing
activities
Agency Values Provides basis for determining
desired behaviors
Strategic Plan Provides basis for establishing
results goals

• Performance Plan
• Establishes expectations for individual results
  that result from activities and behaviors
  throughout the year
• Encourages ongoing discussion of organizational
  progress more inclusive line of sight
• Provides quantitative and qualitative basis for
  annual performance appraisal

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Sample Construct 2 (Continued)

• Annual Appraisal Design Will Include
• Quantitative evaluation of results qualitative
  assessment of activities and desired behaviors
• Summary of strengths and areas to be enhanced
• Uses 1 to 10 rating scale
• 10 Exceptional performance
• 5 Expected performance
• 1 Unsatisfactory performance
• Gradations allow more discussion of relative
  contribution and opportunities for development.
• Greater pay opportunities for high-performing
  staff

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Employee Self-Appraisal

• Engages employee as partner in managing
  performance
• Alerts supervisors to differences in how
  performance is viewed
• Provides source of information about
  organizational or operational issues that
  influence performance

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Professional Development Plan

• While growth opportunities may be limited, it is
  important to develop staff skills and provide
  experiences that will enrich their professional
  lives
• Development goes beyond formal training courses
  may include cross-training, temporary project
  assignments, on-the-job training and mentoring
• Should include timetable for learning skill and
  how it will apply in the employees job
• May include indicator of priority

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Does One Size Fit All?

• Consider if one evaluation form should/can be
  used for all employees, or if separate forms
  should be used, based on
• Staff level
• Nature of work performed
• Business unit
• Union/non-union status

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Other Issues

• Include upward/360o feedback?
• Ensure management buy-in and participation
• Determine level of staff involvement in
  developing and testing the system
• Provide adequate training and opportunities for
  ongoing discussion of system
• Review evaluations to ensure they reflect
• Consistent approach to establishing performance
  expectations
• Common understanding of rating levels
• Assess system effectiveness and revise as
  necessary

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Questions Answers

• ?
• Contact Larry Beers
• James E. Rocco Associates,
  Inc.
• 914-925-3412
• LFBeers_at_JERoccoAssociates.com