PERFORMANCE MANAGEMENT WORKSHOP FOR MANAGERS

COMMERCE ALTERNATIVE PERSONNEL SYSTEM

(CAPS)

February 2010 1

Pay for Performance System

Key QuestionsWhat is a pay for performance system? What are the key drivers for a pay for

performance system? What are the benefits of a pay for

performance system? What can managers/supervisors do to

make the pay for performance system a success?

February 2010 2

Definition of a Pay for Performance System

Pay for performance systems are systems in which pay decisions are based on defined performance levels rather than entitlement, tenure, or other non-performance related factors

Pay decisions include: Merit-based pay increases Lump sum bonuses

February 2010 3

Drivers of Pay for Performance Systems

Pay for performance systems emphasize achieving greater individual and organizational performance results

Need for more flexible compensation practices to Agency specific needs

February 2010 4

Benefits of a Pay for Performance System

Rewards high performers Allows greater flexibility for recruiting and hiring

top talent Provides opportunities for developing poor

performing employees Increases employee motivation Contributes to employee retention Deals more effectively with marginal employees

February 2010 5

Pay for Performance Guidance

1. Make the pay for performance process transparent Managers/supervisors can ensure that employees are informed

about the pay for performance system, understand how the system will impact them, and what employee and management roles and responsibilities are under the new system

2. Provide training for managers/supervisors While managers/supervisors cannot necessarily control the

extent to which training is adequate, you can actively pursue information about the new system to make sure that you have the resources, tools, and skills needed to be successful

February 2010 6

Pay for Performance Guidance

3. Provide accurate assessments on employee performance Ensure success of this system by providing honest, accurate

assessments of employee performance based on articulated performance objectives and performance benchmark standards to truly distinguish employee performance

4. Evaluate employees solely on performance elements A responsibility to clearly articulate individual performance

expectations to employees and to only evaluate them on those expectations

February 2010 7

Understanding the CAPS Performance Appraisal Process

Key Questions What is the performance appraisal process? What are the responsibilities of Rating Officials, Pay

Pool Managers, and Employees? What other pay-related interventions (other than

performance-based pay) are available to managers/supervisors to reward employees for good performance?

How can managers/supervisors acclimate new employees to the performance appraisal process?

February 2010 8

Intent of CAPS Performance Appraisal System

Encourage high performanceEncourage continuous dialogue between

supervisors and employeesProvide a basis for performance-related

decisions (e.g., pay increases, bonuses, PIPs)

February 2010 9

Performance Management

1. PlanningSet goals and measures

Establish and communicateelements and standards

2. Monitoring Measure performance

Provide feedbackConduct progress review

3. Developing Address poorperformance

Improve goodperformance

5. Rewarding Recognize and reward

good performance

4. Rating Summarize performance

Assign the rating ofrecord

Five Key Components

February 2010 10

Recognition

Acknowledge employee ideas

Acknowledge significant contributions in writing

Non-Monetary Ways to Reward Your Employees

February 2010 11

Components of the CAPS Performance System

Performance Indicators “E” for Eligible, “N” for Not Eligible, “P” for Pending, or “U” for

Unsatisfactory Performance Plans

Prepared by rating official with employee input Approved by Pay Pool Manager Critical elements only – minimum of 2/maximum of 6

Performance Standards Benchmark standards Supplemental standards

Performance Scores 100-point scale using benchmark standards

February 2010 12

February 2010 13

80 – 100

60 - 79

40 - 59

0 - 39

BenchmarkPerformance

Standards

February 2010 14

Summary Guidance for Benchmark Performance

Standards Assists managers in evaluating employees with benchmark performance standards

Used to help make distinctions between different levels of performance

Helps ensure greater consistency in the analysis and evaluation of performance ratings

Approved by the CAPS Board in 2005

February 2010 15

Performance Attributes

0 – 39% 40 – 59% 60 – 79% 80 – 100%

Work ResultsWork not successfully completed

Minimally acceptable work results

Work results were accurate, effective and efficient

Exemplary work resulted in maximum impact

Guidance

Failed to follow directions, guidance and procedures

Procedures were minimally correct

Minimal guidance required; brought suggested revisions to supervisor's attention

Guidance rarely, if ever, required

Initiative/Independence

None Rarely offered to provide additional support

Developed proposals for new tasks and activities with input from supervisor

Continuously found new and better ways of performing work

Knowledge

Insufficient technical knowledge/skill

General technical understanding

Superior technical knowledge in all tasks

Exceptional technical knowledge; beyond expectations for position

Quality

Work did not meet minimum specifications

Products were completed with adequate quality

Consistently above average quantity/quality of work

Exceptional quality, rarely room for improvement; serves as benchmark

OriginalityNone Products met stated

requirementsOriginality and creativity in assignments

Exceptional originality and creativity

Problem Solving

Routine problems were not resolved satisfactorily

Routine problems dealt with satisfactorily

Complex problems addressed as they became known and dealt with skillfully and resourcefully

Unforeseen problems solved with dedicated perseverance; conflicts anticipated and avoided through creative alternatives

Communication

Written and oral communications poor and not understandable

Written and oral communication generally understandable

Written and oral communications clear, convincing and effective

Complex ideas presented clearly to varied and diverse audiences; desired outcome achieved

Cooperation

Exhibited uncooperative/unresponsive behavior

Reasonable degree of cooperation with others

Promoted positive and productive relations

Forged new cooperative relations (internal and external)

Organizational Prestige

Negative impact to organization

Minor impact to organization Increased organizational prestige and recognition

Enhanced world class reputation of organization

Timeliness

Work unacceptably late The majority of final work products submitted by established deadlines, but required rework or major editing

Final work products submitted by established deadlines without the necessity for rework or major editing required

Work often completed early

Leadership

Poor leadership skills; provided no positive direction to staff

Sufficient leadership skills Outstanding leadership skills; predetermined goals always attained

Exemplary leadership skills; goals consistently surpassed

Administration

Unable to organize and prioritize work and/or wasted time

Able to organize work sufficiently to meet deadlines without too many delays

Made appropriate, useful suggestions to improve administrative processes

Derived and implemented improvements in administrative processes

Teamwork

Ineffective in working with others

Demonstrated reasonable cooperation in working with others

Contributed positively to group

Initiated suggestions to better group

Summary Guidancefor BenchmarkPerformance

Standards

February 2010 16

Supplemental Standards

Defined in terms of results – “what” and “how” Expressed in terms –

Quality Quantity Timeliness Cost Effectiveness

Written at the “Eligible” Level Use of Supplemental Standards is Optional

Responsibilities of Rating Officials

Develop performance plan with employees

Conduct progress reviews with employees

Modify performance plan with employees as needed

Conduct performance review meetings to discuss accomplishments

Recommend ratings, scores, payouts, and bonuses to Pay Pool Manager through any intervening higher level supervisor(s)

Conduct evaluation feedback meetings with employees

February 2010 17

Responsibilities of Pay Pool Managers

Approve performance plan/plan modification Manage the pay pool Ensure consistency across rating officials Discuss with rating officials any discrepancies

and/or the need for score adjustments Render final decision on ratings, scores,

performance increases, and bonuses

February 2010 18

Pay Pool: A grouping of employees who are combined together for performance-based pay decisions

Responsibilities of Employees

Create performance plan with Rating Official Modify performance plan with Rating

OfficialClearly, concisely, and accurately document

accomplishments over past yearSeek out performance feedback throughout

yearRespond to performance feedback

February 2010 19

Pay for Performance Flexibility

Pay increases upon promotion Managers/supervisors may recommend

employee’s salary anywhere within the band when promoted. Minimum of 6% pay increase.

Performance bonuses Rewards high performers, with intent to

motivate performance Supervisory performance pay

Managers/supervisors at band’s pay ceiling max may receive up to six percent higher through performance

February 2010 20

Comparability Increases

All employees will receive the annual comparability increase except: Employees with an “Unsatisfactory” rating Employees on a PIP at time of comparability

increase Employees on a PIP will receive comparability

increase at the time they successfully complete a PIP

Payment of ACI not retroactive

February 2010 21

Acclimating Employees to the Performance Appraisal

Process Employees must have a clear understanding of

performance expectations Employees will do well if they understand how

performance is linked to success Feedback provides employees with an understanding

of level of performance Employees want to understand if their performance is

meeting management expectations

February 2010 22

Managing and Evaluating

Employee PerformanceKey Questions How can managers/supervisors identify the linkage

between organizational goals and work unit/team goals and objectives?

How can managers/supervisors help employees establish performance elements that are linked to organizational goals?

How are performance plans created? How can managers/supervisors effectively evaluate

performance?

February 2010 23

Linking Individual Performance to

Organizational Goals Identify overall organizational goals and discuss how

they are linked to your work unit/team objectives Discuss the work unit/team objectives and/or specific

products or services and how they are linked to performance plan critical elements

Explain the rationale of how each critical element is weighted; the activities under each element; and the relationship of the elements to the work unit/team objectives

February 2010 24

Components Of A Performance Plan

ELEMENTS OBJECTIVES ACTIVITIES STANDARDS

February 2010 25

Brainstorm Task List Consider the whole job

Look to the coming year for new assignments, resources, priorities, policies

Teamwork makes up part of the organization’s fabric:

Helping others work Information sharing

Use active verbs – e.g., manage, develop, plan, etc.

February 2010 26

S M A R T Tips

February 2010 27

SPECFIC

MEASURABLE

ATTAINABLE

RELEVANT

TIMEBOUND

Choose Measurements

February 2010 28

Quality

Quantity

Timeliness

Resource/Cost

Effectively Evaluating and Documenting Employee

PerformanceProvide employees with tips for writing a

good accomplishment statement Keep records of accomplishments during rating

cycle Summarize all accomplishments for the year by

Critical Element Do not understate or overstate accomplishments Establish a format for accomplishment

statements to maintain consistency and quality (e.g., bullets vs. narrative)

Discuss the desired formatFebruary 2010 29

Evaluating and Documenting Employee Performance

Evaluate the employee’s performance Accurately and objectively Use specific language to describe key

achievements or deficiencies (e.g. work examples, address the critical activities under each element, use positive wording when appropriate)

February 2010 30

Rating Eligibility

An Employee is Ratable if:

Occupies a covered position as of Sept 30 AND

Has worked at least 120 days in one or more covered positions

An Employee is NOT Ratable if:

Does not meet conditions stated as Ratable

Employee has been placed on an approved Performance Improvement Plan (PIP)

February 2010 31

Concept of Intervals

Each pay band is divided into 5 intervals. Intervals 1-3 are for non-supervisory positions and intervals 4 & 5 are for supervisory positions.

Pay progression potential is faster at lower pay bands and lower intervals in pay bands.

Based on OPM statistical study of Federal employee occupational salary histories.

February 2010 32

Intervals and Potential Pay Increases

February 2010 33

ZA - ADMINISTRATIVE

Band Interval Increase

V(GS 15)

4 – 5 0% – 4%

3 0% – 4%

2 0% – 5%

1 0% – 6%

IV(GS 13–14)

4 – 5 0% – 6%

3 0% – 6%

2 0% – 8%

1 0% – 10%

III(GS 11–12)

4 – 5 0% – 7%

3 0% – 7%

2 0% – 12%

1 0% – 15%

ILLUSTRATIVE

ILLUSTRATIVE

ZA – ADMINISTRATIVE (CONT.)

Band Interval Increase

II(GS 7–10)

4 – 5 0% – 8%

3 0% – 8%

2 0% – 16%

1 0% – 20%

I(GS 1–6)

4 – 5 0% – 7%

3 0% – 7%

2 0% – 12%

1 0% – 14%

Payout Rules

Highest scored employee receives highest relative percentage payout (% of %)

Lower scored employees cannot receive a greater relative percentage payout

Tied scores might not receive same relative percentage payout

February 2010 34

Providing Effective Performance Feedback

Key Questions How can feedback improve employee performance? What are strategies that managers/supervisors can use to

provide effective feedback? What are the ramifications of providing inadequate, poor,

or untimely performance feedback? What communication barriers may arise and what can

managers/supervisors do to overcome them?

February 2010 35

Performance Feedback Is An Ongoing Process

Reviewing WorkConducting Progress Reviews and Annual

AppraisalsAddressing Performance IssuesMaintaining open lines of communications

February 2010 36

Performance Feedback Strategies

Provide continuous constructive feedback Prepare the employee for the discussion in

advanceBe clear on the purpose of the meetingHave a clear messageBe specificEmphasize the positive

February 2010 37

Performance Feedback Strategies

Be timelyFocus on accomplishmentsRespect the individualLeave communication lines open

February 2010 38

Consequences of Ineffective Feedback

Employees may not focus on performance goals and expectations.

Employees may lose motivationEmployees may become disgruntledLow employee moraleUnexpected turnoverGrievances

February 2010 39

Communication Barriers

Communication stylesUse of verbal and non-verbal languageLack of trust

February 2010 40

Overcoming Communication Barriers

Familiarize yourself with communication styles of your employees

Understand what motivates your employees

Become aware of your communication style and modify as necessary to be effective

February 2010 41

Providing Feedback

Establish a relaxed environmentEngage in a 2-way dialogueHighlight positive or good behaviorKeep the conversation focused on

performance issuesMaintain control of the conversationOffer constructive criticism

February 2010 42

Providing Feedback

Don’t be confrontationalDon’t be accusatoryDon’t only focus on faults or mistakesDon’t bring personal issues into the

discussionDon’t become agitated or angry

February 2010 43

Managing Marginal Performance

Key QuestionsHow can managers/supervisors successfully

identify a marginal performer? How can managers/supervisors help

marginal performers become high performing employees?

What options do managers/supervisors have for managing marginal performance?

February 2010 44

Identifying Marginal Performance

Missed deadlinesDecreased productivityLack of dependabilityLack of proficiencyFailure to perform current work

assignments

February 2010 45

Understanding Causes of Marginal Performance

Ask Yourself: What is it about the person’s performance that has

a negative effect on the work being done? What are things I actually see and hear that

indicate there is a problem? Does the employee know that there is a

performance issue? Have I clearly communicated performance

objectives and expectations ?

February 2009 46

Understanding Causes of Marginal Performance

What aspects of the employee’s performance needs to change in order to convince me that the employee has improved?

Are there obstacles or barriers to the employee performing well (e.g. work environment, training)?

Is the problem marginal performance or misconduct?

February 2010 47

The failure to follow a workplace rule (whether written or unwritten). Examples of misconduct include tardiness and absenteeism, insubordination, and failure to follow instructions.

The failure of an employee to do the job at an acceptable level.

February 2010 48

Managing the Marginal Performer

Address marginal performance early Document all evidence relating to that

employee’s low performance levelSchedule performance review meetings

with the employee Be prepared to take appropriate action

February 2010 49

Tips for the Meeting

Avoid referring to the situation beyond the impact it has on the employee’s performance

Engage the employee in the discussion to obtain their perspective on the matter

Limit the discussion to job related issues

February 2010 50

Managing Continued Marginal Performance

Readdress the issue with the employee and discuss the causes for lack of progress

Continue to work with the employee to address and overcome performance issues

Determine whether or not the employee is still a good match for the position

Explore alternative options for managing the employee

February 2010 51

Managing Marginal Performance Under CAPS

Managers/supervisors have more options available for managing a marginal performer (e.g., developing a PIP, tailoring responsibilities, little or no pay increases)

Employees have a more vested interest in their performance throughout the year

February 2010 52

Helping Employees who are Failing

Develop and set specific expectations and standards

Closely monitor performance

Assign the employee a “mentor”

Give specific and timely feedback

Consider training, where appropriate

Provide work assignments that build confidence

Help employee plan and prioritize their work

Determine if the performance problem is a result of a non-work issue

February 2010 53

Grievance Procedures

15 calendar days to file a request for reconsideration (informal grievance)

15 calendar days to formally respond to informal grievance

10 calendar days to file formal grievance with WFMO

15 calendar days for WFMO to review grievance 45 calendar days for Deciding Official to respond

to formal grievance

February 2010 54

Grievance Rights

Grievable– Performance Score– Rating– Pay Increase

Not Grievable– Performance Plan– Bonus Decisions

February 2010 55

Additional Information

For further information or questions, please contact your Servicing Workforce Management Office Representative

WFM website http://www.wfm.noaa.gov – A-Z, C for CAPS Information

DOC CAPS Resources Page http://hr.commerce.gov/Practitioners/CompensationAndLeave/DEV01_006181

February 2010 56