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.

www.linkedin.com/in/malcolmgabriel

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The stock market evaluates a company’s performance relative to its competitors


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


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.


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


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.


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?


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


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


Performance rating calibration meetings are necessary to identify the relative benchmark in an

ever evolving performance environment


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


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


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


0%

20%

40%

60%

80%

Needs Improvement Solid Performer Strong Performer Top Performer

9%

74%

13% 4%

Deparment A

0%

20%

40%

60%


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%


6%

62%

32%

0%

Department D

How do the distributions compare between departments?


Avoiding pitfalls in evaluating high performance

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


Surface examples in the performance rating calibration meeting that distinguishes top, solid and lower performers


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


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%



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%



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.


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


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.


• 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


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


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

Calibrating Performance Ratings

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