Performance Management and Succession … Management and Succession Planning ... succession planning...

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Performance Management andSuccession Planning Overview

Performance management operates on a cyclicalbasis and is aligned with the annual strategic andfinancial planning process.

In all organisations the way individuals and teamsare aligned to its objectives and equipped to achievethem is a key factor in the organisation’s success.Developing an authentic performance managementculture is a powerful business strategy to deliverthis.Effective performance management should providebusinesses with:

A clear line of sight between businessperformance and team and individual contribution.

Challenging, realistic and measurable objectivesfor both teams and individuals.

Continuous and constructive dialogue withindividuals about business and personalperformance

Real-time, continuous and robust performancedata.

Individuals who are motivated to achieve theirpotential, develop and grow.

Can-do culture inspired by strong leadership.

Performance management - an overview

Annual performance management cycle

Sound Familiar?‘It is year end at Acme Progressive. Apart fromwrapping up the accounting, managers andemployees are going through the annual dance ofthe performance appraisal, as they call it.

Michael manages fourteen employees directly, so heis going to busy meeting with each of them, filling outforms and gulping antacid. Since the personneldepartment are pushing him to get all his forms in ontime, he is going to have to figure a way to get this alldone as fast as possible.

And he does so. He sends a copy of the appraisalform to all his employees via email. After employeescomplete the forms, he meets with each of them forabout fifteen minutes to discuss the forms and signsthem. Viola! Problem solved. The paperwork getsdone in time, the personnel department is contentand everyone goes back to their “real work”.

From Performance Management by Robert Bacal1999.

Reward & Recognition.Quarterly PerformanceReview.Agree DevelopmentPlan.Monthly 121s.

Annual AppraisalRatings & Calibration.360° Feedback.Monthly 121s.

Half Year Appraisal.Realign Developmentplan.Monthly 121s.

Q1 Q2

Q4 Q3

Revise budgetfor Q4 and set for nextyear. Begin operational

planning.

Forecast andrevise budgets for the

year ahead.

Half yearaccounts.

Revisebudgets & plan.

Strategicplanning for

next year.

End of yearaccounts.

Operationalplans andbudgetcascaded. Quarterly

Performance Review.Review DevelopmentPlan.Reward & Recognition.Monthly 121s

This diagram shows that effectiveperformance management is

a successful performancemanagement culture and providesyou with templates and guidelinesto implement each element ofthe cycle.

more than an annualform filling exercise. Itcan focus the wholeorganisation, teamsand individuals ondelivering the strategicplan and goals.

This toolkit supportsbusinesses in creating



Performance contracts are a formal record of the discussion andagreement between individual and line manager about what the individual,with coaching and support from the line manager, intends to achieve in thecoming period. Performance contracts are usually set for either six ortwelve months and are reviewed at the end of that period in a meeting,often know as an appraisal.Performance contracts will contain a range of performance objectiveswhich allow the individual to set out clearly what needs to be achieved andby when. To work well, these objectives must be both meaningful andmeasurable. Great contracts provide real stretch and detail both WHATneeds to be achieved and HOW it needs to be achieved.

Development plans sit alongside the performance contract and supportindividuals in developing their skills and behaviours to achieve theirperformance objectives. It is vital that plans are owned by the individual andalso detail career goals and actions to fulfil those ambitions.

It is important that performance contracts and development plans arereviewed regularly. This is usually done as part of a monthly one-to-onemeeting. Monthly meetings are the cornerstone of developing aperformance led culture. Ideally, line managers put aside at least one houreach month to review performance, provide feedback and offer coaching.

Working together in partnership to create a performance culture

Most organisations ask managers to agree an overall performancerating from a specified scale with individuals during the appraisalmeeting. If monthly one-to-one discussions are taking place, thereshould already be a clear and shared understanding of performanceand to agree an overall rating should be straightforward.

To ensure results are achieved in the right way many organisationsare now rating performance against both the WHAT and the HOW(see diagram opposite). There is a working example of a ratingsscale in the appraisal document template.

Performance ratings, distribution and calibration forums

“The greater danger formost of us lies not insetting our aim too highand falling short; but insetting our aim too low,and achieving our mark.”Michelangelo, Italian sculptor,painter, architect & poet.

Some organisations use a ranking system to force the distribution ofperformance ratings, but this often fails to recognise exceptionalcircumstances. Most organisations choose to establish an expecteddistribution of ratings that mirrors the standard distribution curve(shown opposite) and use flexibility and judgement to ensure fairness.

Calibration forums are facilitated mediation usually heldimmediately after all performance ratings have been agreed. Theyinvolve key leaders from across the whole organisation and review allperformance ratings together to ensure distribution corresponds toactual performance and differentiates the best from average.

1 2 3 4 5

% of overall population8% 17% 50% 17% 8%

3 4 5

2 4 4

1 2 3

Poor Average GoodBehaviours (how)

Poor

A

vera

ge

Goo

dT

ask

deliv

ery

(wha

t)

Performance Ratings

Performance Ratings Distribution



As discussed earlier, the performance contract and the appraisal or review meeting creates a formalopportunity for line managers and individuals to get together once or twice a year and engage in adialogue about performance and development. It is essential that this is not a top down process or aone-way conservation. It should be a free flowing discussion in which a range of views are exchanged.

We have included an example of a performance contract as part of this toolkit. As you can see this is aformal document which is dated and sets out the objectives for the period, evidence of achievementagainst those objectives, feedback on how the performance has been achieved and an overall ratingagreed upon.

A constructive appraisal meeting is one which:· Is planned in advance, giving plenty of time for preparation.· Individuals do most of the talking.· Line managers listen actively to what is said.· Review is objective and based on evidence.· Performance is analysed not personality.· The whole period is reviewed and not just recent or isolated events.· Achievement is recognised and reinforced.· Improvements are discussed and development plans agreed.· Ends with agreed objectives for the next period.

Performance contracts and appraisals

Performance feedback

The challenge for organisations is that, as valuable and as desirable as constructivefeedback is, it is not a regular occurrence or done well in many workplaces. To becompletely effective performance feedback should form part of a regularone-to-one monthly conversation. This way there are no surprises inperformance review meetings or annual appraisal.

To supplement ongoing performance feedback, a more formal 360 degree feedbackis valuable once a year to assist in performance review and create developmentplans. We have included a template for this in the toolkit.

The key to getting performance feedback right as a line manager is to ask greatquestions. Most people know when they are performing well or not, so give themthe opportunity to express this.

Sometimes you will have to initiate feedback, when you do ensure that your timing isgood and your intent is positive. If your intent is to humiliate or “tell off” then nomatter how well worded your feedback, that is how it will come across. If youfeedback on every little thing you will get a reputation for being “picky”, colleagueswill tune you out and you will lose impact when you have something important tosay.

It is important to remember that the majority of highly motivated and capable peopleare those that hear how well they are doing from their line manager regularly.



Succession planning is typically defined as a process by which one or moresuccessors are identified for key posts and career moves and/ordevelopment activities are planned for these successors.

However, organisations are generally moving away from traditionalsuccession planning and adopting approaches that are much wider in visionand integrated with talent management processes. This is occurring for manyreasons, but notably due to increasing speed of change in the externalenvironment, scarce leadership resource, flatter management structures andescalating recruitment costs. It is essential that effective succession planningand talent management processes are in place to ensure that organisationscan fill key positions with the right people with the right skills at the righttime.

Effective talent management will include the following:

Recruit well, balance the short-term needs with longer terms strategies Ensure that you develop all people early and give them stretch in their role Identify talent at every level in an organisation and create an effective pipeline Use effective engagement and retention strategies (do not assume loyalty) Ensure that all managers own the talent agenda, this is not just an HR issue

Promote and create a coaching ethos and a stronger, values-based culture Identify key roles and ensure that you have effective succession plans in place.

Succession planning and talent management

The performance potential matrix

To use the PPM effectively,organisations will need todevelop the capability ofline managers at every levelof the organisation tomanage performanceappropriately and torecognise the indicators ofpotential.

The PPM can be used toreview all employees, or allmanagers at a certain gradeor all people in a specificdepartment.

It is important to knowthat ratings change aspeople grown and develop.



The Leadership PipelineThe focus of accountabilities andresults need to change as peoplemove up an organisation.Development plans need to helppeople let go of behaviours andcreate new capabilities as theymove up the pipeline.

The Performance Potential Matrix (PPM) was first introduced into organisations more than 30 yearsago as a method of looking at the relationship between performance and potential in the context ofannual succession planning and talent development programmes.

At level Some Potential Clear PotentialPotential Rating

High M

edium Low

Performance R

ating

Development plans which are aligned to both the organisational goals and individual aspirations willhave far more purpose, deliver enhanced performance and develop potential for the future.

To achieve real personal learning andchange, plans require three things:

Create an effective plan by carefully considering input from both the individual and organisationalperspective. Remember development works best when a small number (two or maybe three)development objectives are worked on at once.

Development Plans

An increasing number of highly successful organisations areachieving improved results and greater engagement by linkingreward at all levels, and in all functions of an organisation directlyto performance.

Reward is one of an organisation’s most powerful operationaltools. To be successful in linking reward to performancemanagement, the structure and the kinds of incentives offeredmust clearly signal desired behaviour and performance. You willneed to create a total reward structure that will entice people togo all out to execute organisational strategy effectively andachieve objectives in the right way.

Vital to the success of a performance-based reward system is toensure that all employees understand, ahead of time, the preciserelationship between performance and the incentive.

One size does not fit all when it comes to reward and in designingan appropriate structure, a key question to ask yourself is:How can we objectively ensure that reward, recognition, andpromotions are given to those who deliver for us and that highperforming individuals we can’t afford to lose are retained?

Linking performance and reward

Challenging tasks: real-lifeimportant job demands trigger amotivation to learn.

Feedback: frequent, repeatedfeedback and coaching promoteschange.

Learning something new: the rawmaterial of learning. Without somenew to-dos, change cannot occur.

Each of the above provides a source ofgrowth. However, the real power lies incombining them all together.

Total Reward Structure

Basicpay

Bonuses &incentives

Career &challenge

Training &coaching

Otherbenefits

TotalReward

Quality ofwork life

Individualaspirations

&motivation

Organisationsuccessionplanning

Organisationskills &

capabilityrequirement

360Feedback

(formal andinformal)

Performanceobjectivesin current

period

Process for creating a development plan

SMART DevelopmentObjectives

On the jobstretch

projects &assignments

Externaltraining &

developmentopportunities

Selfdirected

learning &development

LineManager

feedback &coaching

Internaltraining &

developmentopportunities



Performance Improvement Process

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From time to time your ongoing performance management conversations will not result in the desiredoutcomes and at that stage a performance improvement process can be used to support the normalprocesses. This is not a disciplinary action, nevertheless organisations should still have a clear policy andprocess in place to support managers, as it is their responsibility to identify any recurring performanceissues and manage them in an appropriate way.

A performance improvement plan is a great tool to manage continual performance issues.Managers can use these plans when an individual consistently misses performance objectives despitereceiving sufficient coaching and support during their monthly one-to-one meetings and through theirpersonal development plan.

Performance review meetings give managers an opportunity to review the specific areas thatrequire improvement in a systematic way and plan a way forward in conjunction with the individual. Thefrequency of the meetings will depend upon the individual and the nature of the issue, but ideally theseare weekly and are in addition to the normal monthly one-to-one meeting.

We have included a template for a performance improvement plan and guidelines on how to conduct aPerformance review meeting in this toolkit .

Creating a performance-led culture

Creating the right organisational culture to improve the effectiveness of performance management isessential but can be notoriously difficult to describe or plan to change

Apart from developing a systematic approach to managing the performance of your organisation, teamsand individuals, you will also need to focus on the development of exceptional leadership and employeeengagement.

At Real Partners we believe that at the core of a performance-led culture is a heightened level ofownership and empowerment, where each individual is motivated to do all they can for the benefit oftheir internal and external customers and for the success of the organisation as a whole.

If you need further assistance in developing a performance-led culture in your organisation, pleasecontact us.



Performance improvement plans

Performance Management and Succession … Management and Succession Planning ... succession planning...

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