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PerformanceManagement

Good Practice Guide

w w w . s c o t l a n d . g o v . u k

© Crown copyright, 2007

This document is also available on the Scottish Government website:www.scotland.gov.uk

RR Donnelley B52087 09/07

The Scottish Government, Edinburgh 2007


Good Practice Guide

© Crown copyright 2007

ISBN: 978-0-7559-5468-1

The Scottish GovernmentSt Andrew’s HouseEdinburghEH1 3DG

Produced for the Scottish Government by RR Donnelley B52087 09/07

Published by the Scottish Government, September, 2007

The text pages of this document are printed on recycled paper and are 100% recyclable

PERFORMANCE MANAGEMENT GOOD PRACTICE GUIDE

iii

Contents

Page

Introduction 1

The Guide and How to Use It 2

The Performance Management Process 3

The Performance Management Timetable 4

Agreeing Individual Service Objectives 5

Agreeing Individual Behavioural Objectives 7

Establishing Weightings 9

Rating Performance Achievement 11

The Annual Performance Review Meeting 14

The Interim Performance Review Meeting 17

Difficult Performance Management Conversations 18

Personal Development Planning 20


iv


1

1. IntroductionHealth Department Letters HDL(2002)64, HDL(2006)23 and HDL(2007)15 give details of theperformance management arrangements for those staff in the NHSScotland Executive andSenior Management Cohorts.

In summary, the mandatory elements of these arrangements are:

• Common performance management arrangements for all staff within theNHSScotland Executive Cohort, based upon a performance review cycle of April1st to March 31st and including a mid-year review

• Individual objectives to be a blend of service objectives, linked to organisationobjectives drawn from NHSScotland or Board strategic or corporate plans, andbehavioural objectives, linked to the behaviours outlined in ‘Delivery ThroughLeadership’, the NHSScotland leadership development framework

• Individual objectives to be weighted, with individual eligibility for performance-related pay determined by a structured assessment of performance achieved inrespect of each objective

• Personal development plans and appropriate development for all eligible staff

Whilst these arrangements are mandatory for staff within the Executive Cohort, it is forBoard Remuneration Committees to put in place appropriate arrangements for staff withinthe Senior Management Cohort. However, much of what is required by these HealthDepartment Letters is simply good practice, and with that in mind the NationalPerformance Management Committee has commissioned this Good Practice Guide tosupport staff in both cohorts.

Effectively applied, these arrangements will bring benefit not only to you but also to thewider NHS in Scotland and beyond.

Kevin Woods

Director-General Health & Chief Executive NHSScotland


2

2. The Guide and How to Use ItWhat follows is intended to be a guide to good practice.

It takes the form of a series of ‘help screens’, each linked to a key element of theperformance management process, and each of which can be referred to independently.

is what the guidance issued in the various Health Department Lettersrequires or expects you to do.

is advice or examples of good practice to help you do this more effectively.

This guide is intended to be read in conjunction with the appropriate Health DepartmentLetters, and assumes a basic knowledge of the NHSScotland performance managementprocess.

Boxed text

Shaded text


3

The Performance Management ProcessAs with effective personal development, effective performance management is a process,not an event, and as such should be happening informally throughout the year.

However, there is a requirement for staff within the Executive Cohort that the process beformally recorded at least twice each year.

This happens primarily through an annual performance review meeting, a meeting betweenan individual and their line manager to:

• Confirm the purpose and scope of the role and key result areas

• Agree the skills, knowledge and behaviours required to be effective in the role, andagree an appropriate personal development plan, based on agreed developmentneeds

• Agree service and behavioural objectives, outcomes and timescales for thecoming year, linked to NHSScotland or Board objectives and to the behavioursoutlined in the NHSScotland Leadership Development Framework

• Weight these objectives to reflect importance, complexity and challenge

• Review performance in respect of those objectives agreed for the previous year,and discuss and agree an overall level of performance for the year in accordancewith NHSScotland policy

This meeting will typically happen around May each year, and for staff in the ExecutiveCohort must be completed by no later than the end of May.

There is also an interim (mid-year) meeting, a meeting between an individual and their linemanager to:

• Discuss the agreed performance plan, and agree any changes that may beappropriate to reflect changing circumstances

• Review progress, and help with any difficulties

• Review the personal development plan, and ensure that whatever developmentactions were agreed at the performance review meeting are being taken

This meeting will typically happen around October each year, and for staff in the ExecutiveCohort must be completed by no later than the end of November.


4

The Performance Management TimetableIn the case of those staff within the Executive Cohort, HDL(2007)15 lays down a timetableto be applied in respect of the various elements of the performance management processduring each performance year, and this is summarised below.

Whilst these requirements are not mandatory for staff in the Senior Management Cohort,they provide a sound base for remuneration committees when establishing an appropriatetimetable for the performance management of all senior managers within theirorganisations.

By the end of April:

• Corporate objectives for the current performance year agreed

By the end of May:

• Performance review meetings for the previous year completed

• Individual objectives for the current year agreed

By the end of June:

• Personal development plans completed

• Performance outcomes for the previous year and objectives for current yearagreed by remuneration committee

By the end of November:

• Mid-year reviews completed


5

Agreeing Individual Service ObjectivesIndividual service objectives focus on the ‘what’ that needs to be delivered oraccomplished within a performance period.

There are typically five steps to writing effective individual service objectives:

Step 1: Gather information

Information to help you write individual service objectives can come from a number ofsources, for example:

• Corporate plans (e.g. Local Delivery Plan, local authority plans, HEAT targets)

• Local service priorities

• Accountabilities inherent to the role (e.g. delivering an effective human resourcesservice)

• Related key areas of responsibility (e.g. health and safety)

• Specific initiatives (e.g. staff governance, clinical governance)

• Objectives carried forward or ongoing from the previous year’s plan

Step 2: Consider key areas of responsibility

With many roles, key areas of responsibility, associated performance objectives and therelative importance of these objectives are clear.

However, this is not so for all roles, and key responsibilities, associated objectives andrelative priorities should be fully discussed and agreed at the performance review meeting.

Service objectives should then reflect these key areas of responsibility during the comingperformance period.

Step 3: Agree and document performance objectives and measures

A performance objective is a statement of what is expected to be accomplished during theperformance period.

At least one performance objective should be agreed for each key area of responsibility,and each objective should highlight a specific intended achievement.

For members of the Executive Cohort, there should be between eight and twelveperformance objectives, and these objectives should be ‘SMART’ (see below).

The performance objectives of all members of the Executive Cohort should include asignificant contribution at national or regional level.

In most cases, the performance objectives for the current performance period will be knownand can be developed at the beginning of the performance period. However, changingservice needs or priorities may require performance objectives (and measurement criteria)to be amended or developed during the course of the performance period.

Any such changes or amendments should be discussed and recorded at the time of themid-year review.

Use ‘SMART’ objectives:

Objectives should be specific, measurable, achievable, realistic and time-bound

Use action verbs:

Begin each objective statement with an action verb that suggests proactivebehaviour and results, such as ‘achieve’, ‘define’ or ‘determine’.

Develop objectives at the ‘fully acceptable’ level:

It’s important to remember that fully acceptable is a good rating, and means thatexpectations have been fully attained in terms of, for example, consistently meetingservice requirements, completing tasks on schedule, achieving expected results,making contributions within areas of responsibility, or using effective problem-solvingtechniques.

In most cases objectives should be developed at a ‘fully acceptable’ level ofperformance. For clarity’s sake, however, performance at the ‘superior’ and‘outstanding’ levels may also be discussed as appropriate.

Agree objectives and measures that are realistic.


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Step 4: Ensure objectives are clear

Performance objectives and the way they will be measured should be specific andunambiguous, so that it will be clear to everyone when the objective has been achieved.

Step 5: Develop performance measures

There are two main types of measures:

• Quantitative measures

Quantitative measures such as numbers, percentages, ratios or financial figuresare useful for measuring, for example, financial results, service levels, intendedtargets, improvements, waiting times.

• Qualitative measures

Qualitative measures reflect the judgment and experience of those involved insetting the criteria. The basis for a qualitative measure could be feedback fromthose to whom a service is provided, or verbal consensus of those affected by theobjective being measured.

The use of quantitative and qualitative measures will vary depending on the role. In roleswhere service delivery can easily be measured, more in the way of quantitative measurescan be expected.

Performance measures should be discussed and agreed at the same time as performanceobjectives.


7

Agreeing Individual Behavioural ObjectivesIndividual behavioural objectives focus on ‘how we do things’ to accomplish serviceobjectives, and encourage and reinforce the leadership qualities and behavioursNHSScotland wishes to develop as an organisation.

Step 1: Agree individual service objectives and weightings

Step 2: Using the NHSScotland Leadership Development Framework, consider:

• behaviours essential to effective day to day performance

• behaviours essential to the successful achievement of the critical (i.e. highestweighted) service objectives

• Current levels of effectiveness against the qualities and behaviours outlined in theNHSScotland Leadership Development Framework

• Levels of behaviour required for future roles and responsibilities

Step 3: Decide which areas of behaviour are most crucial for the individual during theperformance period

Step 4: Consider how you will evidence and measure the agreed individualbehavioural objectives (e.g. see ‘TRIO’ below)

Think ‘TRIO’:

• Timing: what level of behaviour in required by when?

• Regularity: how often should the desired behaviour be demonstrated?Occasionally? In certain circumstances? At all times?

• Impact: what positive impact would you expect to achieve on service delivery,colleagues, clients, or the individual?

• Observable: how will you gather evidence, and from whom?

Whilst the balance between service and behavioural objectives is determined locally,it is usual to establish at least two behavioural objectives, which should be drawnfrom the NHSScotland Leadership Development Framework.


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Remember:

• Behaviours are generally visible, and therefore measurable

• Behavioural objectives focus on the ‘how we do things’, rather than theachievement of a specific outcome (the ‘what’)

• Behavioural objectives can be directly linked to the achievement of an individualservice objective, or can underpin several

• Behavioural objectives should focus upon developing behaviours crucial to thesuccessful achievement of individual service objectives

• Tools can be used to help determine effectiveness, e.g. 360 degree feedback


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Establishing WeightingsThe aim is to weight agreed individual service and behavioural objectives to indicate theirrelative importance, complexity and challenge.

Weightings must be allocated as individual objectives are agreed at the start of theperformance period.

Step 1: Agree the relative importance of each objective

Step 2: Agree the proportion of weighting points to be allocated to service objectivesand behavioural objectives

There are 40 weighting points in total, and all must be allocated to reflect the agreedimportance, expected complexity and degree of challenge of each objective.

Step 3: Allocate the agreed proportion of the 40 weighting points available acrossindividual service objectives, to reflect the agreed importance, expected complexityand degree of challenge of each objective

Step 4: Allocate the remainder of the 40 weighting points available across individualbehavioural objectives, to again reflect the agreed importance of each objective

Although not a requirement, the balance is generally weighted in favour of serviceobjectives, with typically 60% to 70% of weighting points being allocated to serviceobjectives.

When weighting service objectives, consider:

• The importance of successful achievement during the performance period

• The impact to the organisation or function if the objective is not achieved

• The range of stakeholder groups impacted by achievement

• The importance of each service objective relative to other objectives

• The complexity of the objective (e.g. organisational resistance, breadth ofstakeholder groupings)

• The clinical, technical and professional knowledge required to deliver


10

When weighting behavioural objectives, consider:

• The positive impact of the required behaviour within the service area and acrossthe organisation as a whole

• The potential negative impact if the behaviour is not displayed

• The importance of the behaviour to successfully achieving agreed serviceobjectives

• The importance of the behaviour to achieving the organisation’s overall aims

Whilst all objectives should not be weighted equally, it is not unusual to have one ormore objectives weighted equally.


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Rating Performance AchievementThe aim is to consistently rate the extent to which previously-agreed individual service andbehavioural objectives have been achieved during the performance period.

Step 1: Agree the extent to which each service and behavioural objective has beenachieved, and rate each accordingly on a scale of 1 to 5:

5 (‘outstanding’): Clear evidence that the objective has been substantially exceeded

4 (‘superior’): Clear evidence that the objective has been exceeded

3 (‘fully acceptable’): Evidence demonstrates that the objective has been fully achieved

2 (‘incomplete’): Evidence falls short of demonstrating satisfactory achievement

1 (‘unacceptable’): Evidence falls substantially short of demonstrating satisfactoryachievement

Step 2: Multiply the achievement rating for each objective by the weighting previouslyagreed for that objective, to give an achievement score for each objective

Step 3: Add all the achievement scores together to give a performance score

Step 4: Refer to the relevant table in the extant circular to determine the overallperformance rating based on the numerical score

It is important that there is evidence to support each achievement rating, and that ratingsreflect performance throughout the performance year. A summary of typical ‘performanceindicators’ for each of the five possible performance ratings is given below, together withsome of the pitfalls to be avoided when rating performance.

An ‘incomplete’ level of performance often indicates that the role holder is new in the role,or that objectives have been recently changed. More fundamental performance issuesshould generally have been identified and addressed during the performance year and notfirst raised at the annual review meeting.

If an individual’s performance is rated as ‘incomplete’ for reasons other than those givenabove, or if an individual’s performance is considered unacceptable, an appropriate actionplan should be agreed and taken forward in parallel with the performance review process.


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Sample performance category indicators:

Outstanding: substantially exceeds all targets, consistently exceeds the highest expectations

• Achieves extraordinary results far beyond stated expectations

• Influences others to achieve quality results

• Successfully accomplishes tasks outside of scope of responsibility in spite ofchanging priorities and resource constraints

• Makes ‘breakthrough’ changes that have significant impact

• Anticipates problems and implements preventive measures

• Sought out as the professional or technical ‘expert’ for a functional area

• Viewed as a leader by peers, subordinates and superiors

Superior: meets all targets and exceeds most, consistently exceeds expectations

• Achieves greater than expected results with minimal direction

• Consistently demonstrates quality results

• Completes tasks on or ahead of schedule, often in spite of changing priorities andresource constraints

• Makes a significant contribution within and beyond their area of responsibility

• Anticipates problems and implements contingency plans

Fully acceptable: consistently meets expectations, matches shortfalls withoverachievements

• Requires the expected level of direction and support

• Consistently meets quality requirements

• Completes tasks on schedule

• Achieves the expected results

• Makes an effective contribution within their area of responsibility

• Uses effective problem-solving techniques

Incomplete: misses some targets without counterbalancing overachievements; doesnot consistently meet expectations; produces less than required results

• Requires more than expected direction and support

• Quality of results is marginal or inconsistent

• Completes some tasks on time and others late

• Falls short of achieving expectations or requirements

Unacceptable: misses many targets, fails to achieve minimal performance expectations

• Requires substantial direction and support

• Quality of results significantly below standard

• Misses deadlines without adequate explanation

• Does not adhere to agreed policies and procedures

• Fails to meet expectations or requirements


13

Avoiding performance rating pitfalls:

Common pitfalls to be avoided when reviewing and rating performance include:

The halo effect

The ‘halo effect’ occurs when an overall impression the reviewer has formed of aperson, often on the basis of a positive or negative rating in respect of one particularobjective or behaviour, unduly influences the ratings in respect of other objectives orbehaviours. This often occurs with people who are especially friendly (or unfriendly!)with the reviewer, or when a person is seen as particularly strong (or weak) in one area.

Undue leniency or harshness

If you are rating a number of people, review your ratings for any tendency towardsundue leniency or harshness. As the whole point of a performance management anddevelopment process is to encourage and support high performance you wouldexpect to see a ‘skewed’ distribution of performance ratings within a group, with ac.70/30 split of competent performers to superior or outstanding performers.Incomplete performance (for reasons other than the role holder being new in the role,or objectives having been recently changed) should generally have been identifiedand addressed during the performance year, and not at the annual review meeting.

Avoiding using high or low ratings

Similarly, if you are rating a number of people review your ratings for any tendencytowards ‘centralisation’, again remembering that, as the whole point of a performancemanagement and development process is to encourage and support highperformance, you would expect to see a ‘skewed’ distribution of performance ratings.

First impressions

Whether your first impression is positive or negative, this should not be the basis forperformance rating. Focus your evaluation on measurable performance, facts andbehavior.

Personal bias

This occurs when a reviewer gives someone a higher than justified rating becausethat person has qualities similar to the reviewer (or a lower rating because they havedissimilar qualities). Also, reviewers can simply like some people better than others,unconsciously giving them higher ratings because of these feelings.

Some people will be aware of this tendency and will temporarily change theirbehaviour if they know a review is about to take place. Ensure your evaluation isbased on performance during the entire performance period.


14

The Annual Performance Review MeetingBefore you begin, ask yourself the following questions:

• What are the key components I need to consider to do this really well?

• Has the person I am about to meet been appropriately briefed to prepare for aneffective performance review meeting?

If you are not sure, contact your human resources team for further advice.

Before the meeting:

• Agree a date for the meeting at least a week in advance, ensuring that you allowsufficient time to discuss the role content, past and future service and behaviouralobjectives, and development needs for the performance period

• Ensure that you have copies of the job description and the appropriateperformance review documentation, including where appropriate copies ofprevious performance and personal development plans

• Consider the purpose and scope of the role: has it changed significantly since itwas agreed (or since the last performance review), and have the key areas ofresponsibility changed as a consequence?

• Consider performance against each service and behavioural objective agreed inthe previous performance plan: think not just about what was achieved, but alsoabout how it was achieved, using the NHSScotland Leadership DevelopmentFramework as a guide

• Consider key service priorities for the coming period, and how these link toNHSScotland or Board objectives

• Consider those specific behaviours which you feel contribute to high performanceand could be used more often to improve effectiveness

• Consider any specific behaviours which you feel do not contribute to highperformance and if used less often might improve effectiveness

• Review what development has been undertaken since the last meeting, and theextent to which this has helped in achieving objectives

• Think about what development may be appropriate over the coming performanceperiod


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At the meeting:

• Review performance in respect of each individual service and behaviouralobjective within the performance plan agreed for the appraisal period: recogniseachievements, and what was learned from these achievements

• Discuss not only what has been achieved, but also how it has been achieved,including any specific behaviours that might be used more (or less) often toimprove performance

• Review any favourable or unfavourable circumstances that have helped orhindered performance

• Agree the extent to which each objective has been achieved, and rate eachobjective accordingly

• Review the personal development plan, and discuss the effectiveness of theactions taken to develop their skills, knowledge and behaviours in the last year:what was useful and contributed to the achievement of the performance plan, andequally, what did not and why?

• Review the scope of the role, and the key areas of responsibility as summarisedby the job description, agreeing any changes necessary for the coming period

• Outline your own objectives for the coming year, and how they link to Boardobjectives

• In that context, discuss and agree appropriate service and behavioural objectivesfor the coming year, and agree appropriate weightings

• Building on the agreed performance plan for the coming year, summarisedevelopment needs for the coming year

• Discuss the personal development plan, and agree appropriate developmentmethods to meet each identified need

• Agree the performance plan and personal development plan for the coming year,and ensure that you have copies of the completed performance plandocumentation: if the personal development plan is to be completed later, agreea date to do this no later than the end of June

• Agree a provisional mid-year review date of no later than the end of November

• Agree any issues arising from the review that need further action (e.g. any changein organisation structure or allocation of resources), agreeing who will take anyissues forward, and how progress will be reviewed


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After the meeting:

• Forward the completed performance plan and evaluation summary for theprevious year, the agreed performance plan for the current year, and the agreedpersonal development plan to the next in line manager (the ‘grandparent’)

• Take forward any issues arising from the review that needed further action

Stress can impact on performance: if this has been a factor, ensure possible causesare discussed and what actions that can be taken to reduce the stress agreed.


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2.1 The Interim Performance Review MeetingIt is good practice to carry out interim reviews to review progress, discuss any difficulties,and ensure that whatever development actions were agreed at the performance reviewmeeting are meeting identified needs.

The frequency of these interim review meetings will depend upon the extent to whichperformance objectives and expectations are evolving, but for members of the ExecutiveCohort there must be at least one interim review meeting, mid-way through theperformance period and no later than the end of November.

At the meeting:

• Summarise progress against the outcomes agreed for each objective

• Agree any actions to be taken to help with any difficulties

• Discuss and agree any changes to outcomes, timescales, priorities, etc.

• Check progress in respect of development actions agreed as part of the personaldevelopment plan and offer feedback, particularly in respect of changes inobserved behaviour; ensure positive changes are recognised and encouraged

Do not rely on the mid-year meeting to know what is going on. Discuss performance anddevelopment regularly and informally, meeting to record any significant changes to theperformance and development plans as often as necessary.


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Difficult Performance Management ConversationsWhat follows are some general principles to apply if faced with a difficult performancemanagement conversation: your human resources team will be happy to advise andsupport you should you so wish.

Be ready

Know the message that you want to deliver and the outcome you expect.

Be specific

When providing feedback, specific and timely information provides a ‘map’, givingpeople something they can act on. Using recent examples makes it much more ‘real’,enabling people to recall situations more quickly, thus enhancing the likelihood of abehaviour change.

Defining what effective performance would look like also gives a much more concretesense of what is expected.

Remember to keep notes of your conversations throughout the year, so you are notscrambling at annual review time.

Be timely

Although it is easy to procrastinate on challenging tasks, this is one that is best donesooner rather than later, both for you and for the person receiving the message.

If the feedback is tied to a specific incident, it is best that both parties have theincident fresh in their minds. If it is more general, the sooner the feedback is given,the sooner action can be taken to improve the situation.

Never ‘save’ difficult messages for future annual reviews. The delay will lessen theimportance of the original message, and a ‘negative’ surprise in a review can besignificantly demotivating.

Focus the conversation on the work, not the person

It is important to depersonalise feedback, as individuals can become defensive if theyperceive feedback as a criticism of their personality (e.g. “you’re always late withreports”, rather than “this report was late”): focus the conversation on outcomes andbehaviours.

Where possible, word the situation as asking for something more from the person,rather than something less. Be prepared to describe what you mean, and to offerexamples. Where possible encourage the individual to identify potential solutions.


19

Describe the impact…

…that changing behavior or improving performance will have from a positiveperspective. Explain how choosing to do nothing will affect their career and ongoingperformance.

Also consider the extent of the impact. If the impact is insignificant, it may simply bea style difference and not worth mentioning.

Where possible discuss one or two areas at most

As you are sitting down to have a conversation, have the thought ‘less is more’ in theback of your mind.

Most people will ‘tune out’ if you focus on more than one or two areas to work on.We all realise that there are at least one or two areas where we can improve. Generallydiscussing a long list of issues is not helpful, so make sure you choose wisely andconsider the one or two areas that if improved would make the most positive impact.

Offer support

Demonstrate a sincere interest in helping the individual make improvements. Ask forand listen to their perspective first, but recognise when it is no longer valuable to‘rehash’ the situation. Be ready to move to action.

Do not be afraid to ask what you can do to help. Make sure that the personunderstands that constructive feedback is an important part of growth anddevelopment, and that you see it as an investment in their future.

Reach agreement…

…. about what the individual will do to change or improve their performance. Settimelines to complete agreed actions, and a time frame to review progress in others.

Take the time to praise and recognise positive behaviour

Look for opportunities to provide positive feedback. Positive recognition goes a longway.

Be available

After the conversation, let the receiver know you are available to support them, andexplain any other resources that can be used to facilitate the improvement.

Remember, every situation is different

People are different.

Some people want greater compassion and need less support, while others maywant you to be concise (possibly even blunt) with minimal compassion exhibited.

Invest some time in considering what the receiver may prefer in this situation.


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Personal Development PlanningWhat follows is a brief summary of possible approaches to development that may be usefulwhen agreeing personal development plans.

• Planned projects that enable people to work beyond the normal sphere oftheir role

• Planned ‘on-the-job’ training

• Planned ‘off-the-job’ education, training or development programmes

• Internal training programmes

• External training programmes: universities, business schools, local colleges, andprivate providers

• Distance and open learning

• Mentoring

• Secondment

• Work shadowing

• Coaching

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