Performance management policy: a 20-step plan that will not fall foul of the law

Performance management policy: a 20-step plan that will not fall foul of the law

1. Introduction

Eight specific criteria were suggested as guidelines when formulating employment policies and practices to ensure that these are compliant with the law, equitable, and developmental.

Policies need to be:(1) legally consistent (2) legitimate (or valid) in the eyes of employees (3) avoid adverse Impact on designated groups (4) be related to requirements of the job (5) allow for reasonable accommodation of designated groups (6) be consistent with other business practices and policies (7) be well documented and accessible by all employees, and (8) have strong links to business strategies and priorities.

In the June article it was stated that "Performance Management systems need to articulate and promote the key human resource management principles and values" that underpin the management of people. These principles, and values should be clearly articulated and communicated across the entire organisation in the form of consistent policies and procedures.

This article attempts to marry the two requirements: present a policy and practice framework as a roadmap for compliance and peak performance, AND which is legally defensible, equitable and developmental in nature.

2. Policy definition and rationale

Performance management is a business process that links what individuals and teams do on a daily basis with the larger goals, values and cultural practices of XYZ COMPANY (insert your company’s name here) and the needs of its customers; it is a process for establishing a shared understanding about what is to be achieved and how it is to be achieved; it is an approach to managing people that when done well, contributes to an enduring and healthy organisation.

This policy seeks to facilitate the shift to a strategic approach to the management of performance and empowers managers and employees to see the performance as an integrated and dynamic, real-time feature of work life. It is not a separate stand-alone process. It must be integrated with the work unit’s business, and operational plans and budgets.

3. Policy statements/guidelines

# POLICY STATEMENT 1: Company xyz views Performance Management (PM) as a business process

Performance management is an integrated part of the Company’s business process. It is about the everyday actions and behaviours of managers and employees working as a team to deliver the goals of the company to meet customer needs, improve performance, and themselves. Performance management is not about a set of forms, the annual appraisal ritual, or the merit or bonus scheme only.

# POLICY STATEMENT 2: We will use the management of performance to create a shared understanding about what is to be achieved (outputs and results) and how it is achieved (style and competencies)

Managers and employees are required to use a PM system to create a shared understanding about what is to be achieved and how it is achieved. Managers and supervisors must ensure that individuals and teams have a common understanding of how their jobs connect to the mission and goals of the business. To improve performance they also need to know what superior performance looks like, and how to achieve it.

Performance can be described as a set of tasks, goals, behaviours or results or any combination of these elements. The goals and tasks must be formalised into a performance agreement, performance contract, or service level agreement.

# POLICY STATEMENT 3: PM is viewed by xyz company as an approach, AND a system to manage people and performance

The focus of performance management in Xyz Company is on connecting people to one another, and to the company as a whole and its values. Managers and supervisors are mandated to support people to work together to achieve shared aims. Managers and supervisors will be accountable for working effectively (through coaching and motivating) with those for whom they are accountable.

# POLICY STATEMENT 4: In company xyz managers and employees will use the management of performance for the health, and long-term growth of the business

# POLICY STATEMENT 5: Competencies and unit standards* drive the process of achieving performance, results, and development

Managers, and employees are required to identify and define the competencies and unit standards to steer the work unit, teams, and individuals to produce superior performance, and foster a learning climate conducive to continuous development.

* Competencies and unit standards always have a clear definition and a list of key actions and behaviours to create consistency for the purposes of measurement and integration across people management systems.

# POLICY STATEMENT 6: In xyz company judgment will be the most important factor in determining competence and performance ratings; mathematical calculations cannot be a substitute for the use of good judgement and common sense when it comes to performance assessments

Company xyz allows and encourages reasonable discretion in performance assessment whilst moving away from formulas and numerical ratings. Managers and employees are directed to rely on a combination of subjective and objective interpretation of performance information to reach a rounded conclusion about performance and competence.

# POLICY STATEMENT 7: In company xyz clear, consistent, and visible involvement by senior executives and managers is mandatory for successful performance measurement and management

Senior leadership is directed to personally articulates/spread the word about the mission, vision, and goals to various levels within the company, and are also involved in the dissemination of both performance expectations and results throughout the business.

# POLICY STATEMENT 8: Effective and open communication by all levels of management and employees is mandatory

Managers and employees are required to proactively communicate with one another, stakeholders, and customers in order to share assessment results, and any new initiatives to improve performance.

Internal communication is an inherent requirement for all employees and managers to ensure accomplishment of organisational goals. External communication is important to strengthen partnerships with customers and in eliciting favourable support from stakeholders.

# POLICY STATEMENT 9: Accountability for results must be clearly assigned and well understood by everyone

Management and employees are required to proactively identify what it takes to determine success and make sure that all managers and employees understand what they are accountable for. Accountability is a key success factor.

# POLICY STATEMENT 10: Measures must be linked to performance planning and assessment for both teams and individuals

Managers, supervisors, and employees are required to identify the correct measures by which performance and competence will be assessed. The company will have valid and reliable data for the selected measures.

# POLICY STATEMENT 11: Targets should be linked to appraisal and assessment discussions

Targets that are linked to appraisal and assessment discussions are designed to make managers, teams, and employees at all levels accountable for their contributions to the achievement of the overall strategy.

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NOTE: Executive management will find it helpful to wait until at least the second year of implementing a performance management process before linking targets to individual appraisals. This lets local managers and employees become familiar with and understand the system prior to assigning accountability. It also provides some time to gain experience with local measures and objectives, assess their effectiveness, and make appropriate adjustments.

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# POLICY STATEMENT 12: Compensation, rewards, and recognition must link to performance measures

A clear link between achieving a specified performance target and some form of meaningful compensation, reward or recognition should be used as a positive performance incentive.

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NOTE: Managers and employees intuitively understand the importance of a performance measure when it is directly tied to financial remuneration or other meaningful reward or recognition. Rewards and recognition may include either monetary awards (e.g., cash awards, fast track awards,) or non-monetary commendation (e.g., plaques, certificates, peer recognition). Managers should certainly recognise performance that meets or exceeds targets and expectations.

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# POLICY STATEMENT 13: Results, and progress toward achieving outputs, and results will be openly shared/communicated with employees, customers, and stakeholders by executives, managers, and supervisors

While sensitive information generally must be protected performance measurement information will be openly and widely shared with employees, customers, stakeholders, vendors, and suppliers to the greatest extent practicable. Information about performance objectives and specific progress toward these objectives can be provided on an organisation’s Intranet site, employee bulletin boards, and public notice boards.

# POLICY STATEMENT 14: Performance measurement results will be used to effect continuous performance change and improvement

It is mandatory to use assessment results to build towards continuous performance improvement, and to set stretch goals for managers and employees.

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NOTE: There are certain significant aspects of using the results of performance measurement that should be kept in mind when deploying a performance management system. Performance measures should be used to assess strategic, and 1-year goals and objectives; provide timely, relevant, and concise information for use by decision-makers at all levels to assess progress toward achieving predetermined goals.

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# POLICY STEMENT 15: The system to follow for managing total performance (strategically and operationally) for a 3-year period is shown in figure 1 below.

# POLICY STEMENT 16: Managers and supervisors are to be sufficiently well briefed and trained to take responsibility to implement a formal performance management system. Everyone involved in the management of the process needs to know:

>> The purpose of performance management

>> How all role players (executives, managers, employee, shop stewards, customers) will benefit from the process

>> The performance management policies that guide the management of the process

>> How each phase of the process works and the role they play in each phase (planning, managing, evaluating, compensating)

>> How decisions about performance reviews and rewards will be made; how conflict and disagreements about ratings, and remuneration will be handled

>> How flexible will objectives and accountabilities be?

>> The performance and cultural values that the business seeks to conduct its affairs by (the what and how of performance)

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NOTE: Subsequent training and briefing sessions must occur at the team level where managers and employees are ideally trained together in mixed groups to promote transparency of information and to encourage a partnership approach to the management of performance. LINE MANAGERS MUST AT ALL COSTS AVOID THE PROCESS BEING SEEN AS A SYSTEM THAT IS OWNED AND DRIVEN BY HUMAN RESOURCES.

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# POLICY STEMENT 17: Managers and employees are mandated to conclude a development plan for a 1-year performance period, and up to a 3-year career development period.

# POLICY STEMENT 18: Managers and employees are required to conclude a written performance agreement which is updated as and when circumstances dictate that a change is required; agreements and contracts are not cast in stone.

# POLICY STEMENT 19: Managers and employees are required to communicate formally and informally throughout a performance cycle.

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NOTE: Ongoing performance communication is the process by which managers and employees work together to share information about work progress, potential barriers and problems, possible solutions to problems, and how managers/supervisors can provide ongoing support to the group to achieve its goals. This dialogue links planning and assessment and creates a living process by which to manage performance.

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# POLICY STATEMENT 20: The Company will follow a balanced approach to paying for superior performance in combination with reaching superior development targets supported by a structured wage and benefits system that is market related