How are you performing?

A recent study by Mercer highlighted the fact that managers in the public service have been rewarding civil servants with positive performance appraisals and rewards that are well above average. While this is costing the tax-payer a substantial sum, poor practices in employee reviews are not restricted to the public sector: many employers end up over-paying because managers and supervisors are simply not trained in how to run performance reviews or how to use them for positive effect.

One of the outputs of the Government Benchmarking process of recent years has been the introduction of the PMDS (Performance Management Development System). Put simply, the system uses a combination of interviews and a written questionnaire to evaluate the performance of workers in the civil service and other public sector bodies. Workers are then given an overall rating on a five point scale, with a score of one allocated to the worst performers and five to the highest performers. Critics of the Public Service’s PMDS highlight what goes wrong in many performance management processes: Of 19,000 workers’ performances reviewed in its initial operation, only 18 scored a one, and just 285 scored a two, on the five point scale. Those who score a one do not normally receive a pay increment, but those who score a two receive a pay rise and are only denied the opportunity for a promotion for a year. This leaves the vast majority of civil and public servants (those rated 3 – 5) earning increments of between 500 Euro and 6,000 Euro on top of the five per cent pay award given under the social partnership agreement this year.

A review by the designers of the Irish government’s PMDS found that the main reason for this over-payment was simply that the system was not being implemented properly. As designed, between 20 and 30 per cent of employees were expect to be graded a four, for example, whereas in practice more than 50 per cent of civil servants were assessed at that level. In one government department, 40 per cent of staff were awarded a score of five! Although these figures relate to the public sector, similar patterns have been found on similar schemes in the private sector. Part of the problem is that those conducting the appraisals are unable to give bad news to workers, and that is not surprising as workers on the receiving end also give appraisals a bad review: ETS HR consultants did a survey which found that with 38 per cent of workers are generally dissatisfied appraisal processes carried out by their employers (rising to 53 per cent in the manufacturing sector).

Anecdotal evidence suggests that many managers in both the public and private sectors have not being properly trained in how to use performance management systems. Many feel embarrassed and unprepared when carrying out performance interviews. Often, they score performance low in confidential written statements, but then give positive reviews during face to face interviews and appraisals. Usually, if an employee ‘deserves’ a lower grade, the manager awards a three or four and counter-balances this by sending the employee on a training course to ‘upskill’ in the area they are performing badly in, so that they can claim to have done the right thing. The net result is sometimes a confused and unmotivated workforce, and a significant over spend on rewards.

So how can you avoid this happening with your performance management system? ETS suggests that companies need firstly to automate some parts of performance management – anything from setting objectives to rewarding high performance could do away with paperwork and meetings, leading to a greater focus on results, more quantitative measures and fewer qualitative grades. Employers also need to invest in performance management and staff appraisal training.

An important first step is to get managers and supervisors to explore staff appraisal, its benefits and the types of systems available. These managers and supervisors then need to take control of the performance management and appraisal meetings by knowing the steps to take before, during and after the meeting. This leads to identifying which results really need to be focused on, what really motivates staff to perform, and what is involved in learning how to recognize that there are different personality types who can be managed in different ways.

Where staff are underperforming managers need to learn how to close the performance gap through coaching using counseling models. They also need to equip themselves with appropriate communication techniques for positive performance management including active listening, appropriate questioning, constructive feedback and positive body language. Allied to the review process is the importance of recognising when appraisal and positive performance management is not enough, and knowing when to activate the disciplinary process.