Calibrating Performance Ratings
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Transcript of Calibrating Performance Ratings
PERFORMANCE CALIBRATION SYSTEM FOR SUSTAINING HIGH PERFORMANCE
Malcolm Gabriel [email protected] Cell: 734-730-2405 Profile: www.linkedin.com/in/malcolmgabriel Blog: www.malcolmprestongabriel.wordpress.com
The following is a summary of various presentations that I designed and delivered across different companies to
implement a performance calibration system to sustain high performance.
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Embedded images were purchased from Fotosearch
The stock market evaluates a company’s performance relative to its competitors
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Company Performance is Relative • Even if Company B exceeded its EBIT targets, there is still
an overall industry ranking as to which companies have outperformed others.
• Once ranked, the market rewards top performing companies through share price appreciation.
• Relativity induces action to exceed market expectations
Company A Company B
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Evidence of High Performance Cultures What is a High Performance Culture? A system of beliefs and values centered on
continuously creating break-through performance.
Why strive to be a high performance culture? We need transformational change, not just incremental improvement.
Leverage the energy and benchmark of the top performers to drive up the performance of the rest of the organization.
Create the environment for employees to be and achieve more than they can imagine.
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What does it look like? § High performance cultures distinguishably
identify, recognize and reward top performers § Expectations of performance and leadership
are continuously raised for everyone § Lower performers are identified and proactively
managed § New “talent” replaces low performers § High sense of accountability for outcome § Rate of learning is exponential
High Performance Cultures sets the benchmark “relative” to others and distinguishably rewards the
top performers
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The relative standard becomes the benchmark
The relative standard becomes the benchmark even if performance exceeded the original target.
.
January June December
Objective: Produce 10 widgets by December
Capital budget cuts
New system introduced
Someone found a way to improve their process
Downsizing Average Team Production: 14 widgets
Revisit Objectives: Produce 12
by December.
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High Performance distributions distinguishably reward their Top Performers
15%
60%
20%
5%
0%
10%
20%
30%
40%
50%
60%
Below Meets Meets Exceeds Top
% Bonus Payout
#% of Combined Annual Base Salary
Fixed bonus envelope
Distinguishably rewarding top performers in a fixed envelope requires a very aggressive distribution
Motivation = Reward > Effort relative to other’s rewards for their efforts.
% Bonus Payout
% Bonus Payout
% Bonus Payout
Otherwise, why bother?
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Some challenges
• Distribution level • The size of the evaluation pool • Including exits throughout the year • New promotes • Stigma attached to “fit” • Downsizing and the bottom ratings • Exit and renewal • Timing of evaluations
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Evolving expectations in an ever evolving performance year
Don’t become a pinball!
In an ever changing environment, continuously clarify the
deliverable and the expectation of performance.
Performance Rating = D > EofP EP
D
Expectations of Performance
Deliverables
“show me how you measure me and I’ll tell you how I’ll behave?” – Eli Goldratt
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Performance rating calibration meetings are necessary to identify the relative benchmark in an
ever evolving performance environment
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Calibrating on the relative performance benchmark is necessary because:
• Employees generally: • have visibility to each others’ contributions and overall effectiveness • share their performance ratings • are very aware of which environments are more difficult than others to achieve
results • are aware of windfall environments that could have affected results • are acutely aware of which are “favorites”
• Assigning performance ratings that are incongruent with real achievement has a profoundly negative effect on employee morale and aligning their energy to the desired behaviors
• Getting to a common understanding of “real achievement” is the toughest and most necessary part of the performance evaluation calibration discussions
Profile: www.linkedin.com/in/malcolmgabriel / Blog: www.malcolmprestongabriel.wordpress.com
Performance rating calibrations
Experience Environment
Impact Role
Toni
May
or
Nikita Slobodkin
Toni Mayor
Michael Coulson
Jack Nicholson 9 10
11
11.5 In
divi
dual
Exp
ecta
tions
of
Per
form
ance
for a
“Mee
ts”
Calibrating Performance expectations
What is:
• Exceeds Expectation?
• Meets Expectation?
• Partially Meets?
Developing a “Shared Understanding” of “Meets”
for a specific position
e.g. 10 widgets by December
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Performance rating calibrations – differentiating performance Before the roundtable: • Complete individual evaluations of performance and leadership. • Evaluate performance against objectives, expectations of performance and peers. • Prepare documents with concrete examples, citing the context, environment,
experience and impact of the performance. At the roundtable: • Discuss process and ground rules for giving input into each others ratings
distributions and employee appraisals • Establish a common understanding of the reasons for the emerging benchmark • Balance performance ratings to target distribution After the roundtable: • Rollup and consolidation of performance ratings across different departments or
business units in the organization
• Communicate performance rating after approval of distribution • Initiate development plans or performance improvement plans for the bottom
performers • Begin objective setting planning for the following year
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At the performance rating calibration, be ready for “Why?”:
9-‐B loc k G ridPerformance R ating & L eaders hip C ompetenc y R ating
PROFICIENT STRENGTH5
DEVELOPMENT NEET
5
2.5
4
41
2.5
5
EXCEEDS
MEET
EXPECTATIION
Perfo
rman
ce R
atin
g (Y
)
Leadership Competency Rating (X)
1
9
2 3
4 6
7 8
NOT
MET
Key Questions
• Will the rating be a surprise to peers and other managers?
• Will the “exceeds” rating on an objective be a surprise to customers and internal clients?
• Is the “exceeds” rating on an objective affected by a “windfall”?
• Was the result really a result of their individual effort?
A 9-block grid is common across many companies and industries and reflects the triangulation of an individual’s achievement of results and demonstration of certain leadership traits. The leadership competencies will vary by company based on the cultural emphasis.
In some companies the x-axis may denote “potential” or “runway” and involves an assessment of an individual’s potential to develop and grow into high levels in the organization.
Performance rating calibrations
Performance Did Not Meets Meets Exceeds
N / A
1. Elvis Presley (MG) 2. Richard Nixon (FA)
1. Anne-Marie Slobodkin (QR) 2. James T. Sullivan (QR) 3. Michael Wazalski (FA)
1. Mary-Jane Lewis (MG) 2. James T. Kirk (FA) 3. Roger B. Ellis (QR)
1. Charles Bronson (MG) 2. Maryln Munroe (FA) 3. Jean-Luck Picard (FA) 4. Richard Snider (QR) 5. Chris Lee (QR) 6. Christine Tucker (MG)
1. Bruce Nick (MG) 2. Catherine Callaway (QR)
Jackie Welchen (QR)
1. Michael Jackson (MG) 2. John Doe 3. Jane Smith
Lead
ersh
ip
Stro
ng
Prof
icie
nt
Nee
ds
Dev
elop
men
t
Is Christine Tucker’s performance better than Michael Jackson (MG)?
Is Richard Nixon’s performance better
than Charles Bronson (MG)?
* Names are fictitious
Performance rating calibration
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0%
20%
40%
60%
80%
Needs Improvement Solid Performer Strong Performer Top Performer
9%
74%
13% 4%
Deparment A
0%
20%
40%
60%
Needs Improvement Solid Performer Strong Performer Top Performer
0%
58%
39%
3%
Department B
0%
20%
40%
60%
80%
Needs Improvement
Solid Performer Strong Performer Top Performer
21%
71%
7% 0%
Department C
0%
20%
40%
60%
80%
Needs Improvement Solid Performer Strong Performer Top Performer
6%
62%
32%
0%
Department D
How do the distributions compare between departments?
Avoiding pitfalls in evaluating high performance
Evaluating the role; not the employee
Rating employees favorably because they are in critical roles rather than rating their performance or leadership attributes within the critical role
Ranking for downsizing Ranking employees for downsizing rather than ranking employees for their overall end of year performance rating
Not clearly distinguishing b/w performance and leadership
Not rating at employee Needs Development on leadership or performance relative to peers because the employee received an Exceeds rating on performance or leadership relative to peers
Defaulting a rating based on time in role
Automatically ranking a new hire or promotion as a Needs Development
Ranking based on recent incident
Focus on the most recent examples of behaviour or performance rather than the entire performance management cycle
Ranking based on one incident
Base the evaluation on one incident, good or bad
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Surface examples in the performance rating calibration meeting that distinguishes top, solid and lower performers
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Examples of behaviors that resulted in a “Meets” rating
• Self-induced journey outside of “comfort” zone. • Initiating ideas and driving them through to completion. • Complete a job even if it is not within their accountability. • Meet all their objectives within an acceptable range of the performance metrics, and is exceeding some
of their stated objectives and relative to their peers • Embrace change, speaking positively, and presents mitigation strategies along with risks. • Entrepreneurial and have or work with for-profit and / or not-for-profit organizations on a part-time
basis, and show this entrepreneurial flair inside Bell through their ideas and execution. • New promotes also shined as solid contributors often inspiring confidence from others who normally
react with surprise that the employee is a new promote • Contribute ideas across functional expertise, but they also make cross-link connections for others. • Eloquently connect technical and global view and make cross-domain link connections • Ensured that there were “no surprises” on budget items. • Good management practices, and above average employee engagement scores
15%
60%
20%
5%
0%
10%
20%
30%
40%
50%
60%
PME Meets Exceeds Exceptional
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To some managers this was described as “meets” while to others this was described as “exceeds” or “exceptional”.
Examples of behaviors that resulted in Exceed Expectations
• Excel at cross-functional linkages, often gaining commitment from other business partners to propose items previously not supported
• “end-to-end” accountability and ensure mutual understanding • Winning mindset, collaborating, showing linkages, • Inspiring commitment, in new and ambiguous situations with no predetermined procedures • “win over” critics by collaborating “behind the scenes” to iron-out assumptions • Demonstrate interpersonal tact and charming influence in high politically sensitive projects • Perceived by peers as “business-focused”, yet perceived by clients as the “technical-expert”. • Always (not only often) seeing new ways to run the business, seeing the long-term picture • Special projects and balances workload through appropriate delegation • Demonstrate confidence in self and builds confidence in others. • Showing tact in apportioning accountability
15%
60%
20%
5%
0%
10%
20%
30%
40%
50%
60%
PME Meets Exceeds Exceptional
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To some managers, the individual’s placement on their compensation range was a key factor in evaluating whether this type of action and behavior culminated in a meets or exceeds rating.
Examples of behaviors that resulted in Below Meets Expectation
• Shows consistent negative behaviour to new ideas without exploring the merits or assumptions
• Communicates in a “silo” mentality • Negative attitude • Did not induce or initiate an improvement change in the absence of a top-down
change project • Doesn’t carry the load that peer groups have done or achieved. • 70% of the scope and responsibility is comparable to a lower level position.
Specifically, the employee hasn’t elevated the role significantly to be comparable to the expected outcomes of the position.
• Comments like: “it’s not part of my task” / “not in my job scope”
15%
60%
20%
5%
0%
10%
20%
30%
40%
50%
60%
PME Meets Exceeds Exceptional
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Once leaders discuss how they arrived at a Solid rating or an Exceeds rating, they started adjusting their own
calibration points on a performance standard.
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Inevitably, ratings then get adjusted upwards or downwards
Reactions and Approaches to the those with lower performance ratings
Potential reactions Description Recommended Response
Disbelief “I don’t believe it.” ; “This can’t be happening.” Confirm that it is happening.
Heightened Anxiety Concerned about stigma and their future Don’t rescue; Acknowledge feeling Don’t debate the “whys”; Regular feedback
Anger / Mistrust in the System
“Why me?” “Shouldn’t that person be there before me?”
Don’t rescue; Don’t debate the “whys”; Acknowledge feeling
Reduced Self-Confidence
Experience a “knock” in their self-esteem after hearing their rating
Acknowledge feeling; Don’t rescue; Build confidence
Depression A more sever form of reduced self-confidence Solemn silence and / or noticeable stressful non-verbal behaviour
Do NOT avoid the employee in hallway interactions or meetings, Engage the employee in all possible situations to make them an important part of a decision or outcome. Recommend the Employee Assistance Program (EAP)
Sick and Disability In more severe cases, it can be expected that employees could “call in sick” as a result of the anxiety associated with the rating
Respect the disability management guidelines, Schedule many face-to-face time Re-build their confidence
Relief Most people suspect something is “in the wind”. Respond with empathy and follow up with strong support to make things better. Always close off with “I’m here in case you need to talk”.
Acceptance How do I fix this and change the situation? Coach / develop
What’s Next? Help me get through this quickly Coach / develop
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Here is what to do if you find yourself at the BOTTOM of the performance ratings
• Perception is reality. • Partner with your leader to change Your situation. • Acknowledgement gets collaboration. • Get to know how you are being perceived. • Surface assumptions about actions and perceptions. • Get to know what others are doing relatively well. • Is the role and / or environment right for you? • Plan for a “come back”. • Build an action plan to over deliver.
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• Show humility • Share your learning and experiences with others • Build confidence in others • Set higher standards for yourself • Mentor / coach those at entry level positions • Consistently re-invent yourself
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Here is what to do if you find yourself at the TOP of the performance ratings
Next…. • Begin the process for cascading corporate and business
unit objectives, targets and metrics • Conduct goal setting calibration discussions just like you
did with performance ratings • Establish what a “meets” and “exceeds” looks like for
each goal for every employee relative to their experience and position within their compensation range
• Communicate these to employees with a disclaimer that these will be influenced by the relative contribution of each employee as well as the changing circumstances within the performance year
Profile: www.linkedin.com/in/malcolmgabriel / Blog: www.malcolmprestongabriel.wordpress.com
CONTACT ME FOR HELP ON IMPLEMENTING PERFORMANCE RATING CALIBRATION SYSTEMS FOR SUSTAINING HIGH PERFORMANCE IN YOUR ORGANIZATION
Malcolm Gabriel [email protected] Cell: 734-730-2405 Profile: www.linkedin.com/in/malcolmgabriel Blog: www.malcolmprestongabriel.wordpress.com