MODULE 2 PERORMANCE PLANNING DEVELOPING THE PERFORMANCE AGREEMENT

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1 MODULE 2 PERORMANCE PLANNING DEVELOPING THE PERFORMANCE AGREEMENT INTRODUCTION TO THE MODULE The module covers the skills required to reach a performance agreement. A performance agreement is the outcome of the decisions made jointly by the manager and the individual during the planning part of the performance management sequence. It provides a foundation for managing performance throughout the year (ongoing performance management) and for guiding improvement and development activities. It is used as a reference point when planning and reviewing performance and is therefore a key component of a performance management system. It contains agreements on expectations in the form of the results, competencies and actions required, defined as performance and learning goals, and on action plans to develop performance and abilities. The basis for these agreements is a role profile which is jointly developed by the two parties. CONTENTS This module contains: 1 An introductory brief describing the module. 2 A list of the key learning outcomes. 3 A plan of the module s sessions including approximate timings. 4 Details of the module s 10 sessions. 5 A set of handouts. MICHAEL ARMSTRONG, 2015

2 46 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT Module 2 plan Session Type Description Time (minutes) 2.1 Presentation Performance agreements Presentation and Exercise 2.1 Preparing a role profile Exercise 2.2 Preparing a role profile Presentation and Exercise 2.3 Defining key performance indicators Presentation and Exercise Presentation and Exercise Presentation and Exercise Presentation and Exercise Presentation and Exercise Presentation and role play 2.1 Setting goals 60 Aligning individual performance goals with corporate goals Aligning individual values with corporate values Defining knowledge and skill requirements Identifying behavioural competency requirements KEY LEARNING OUTCOMES Development planning 60 On completing this module participants will: understand how performance agreements are used as the basis for planning performance management; understand the meaning, significance and use of role profiles, key result areas, and key performance indicators in a performance management system; appreciate how to analyse knowledge and skills and competency requirements; have developed their goal setting skills; know how to prepare development plans. PUBLISHED BY KOGAN PAGE

3 LEARNING MODULES 47 SESSION 2.1 PERFORMANCE AGREEMENTS Introductory presentation by programme leader (Handout 2.1) Definition of performance agreement (PowerPoint slide 2.1) A performance agreement is a summary of the joint decisions made during the planning stage of performance management. It covers: key result areas as defined in a role profile; key performance indicators; goals expressed as targets or performance standards; definitions of knowledge and skills and competency requirements; a development plan. Each of these components of a performance agreement is described in the relevant exercise in this module. Significance of performance agreements (PowerPoint slide 2.2) A performance agreement is used as a reference point when planning and reviewing performance and is therefore a key component of a performance management system. MICHAEL ARMSTRONG, 2015

4 48 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT SESSION 2.2 PRESENTATION AND EXERCISE 2.1 DEVELOPING A ROLE PROFILE (1) Introductory presentation by programme leader Inform participants that this exercise is about developing a basic role profile. Role profile defined (PowerPoint slide 2.3, Handout 2.2) A role profile describes the key characteristics of a role the part played by individuals in fulfilling their work requirements. A full role profile specifies: the overall purpose of the role what it exists to achieve; key result areas the elements of a role (no more than five or six) for which clear outputs and standards exist, each of which makes a significant contribution to achieving its overall purpose; knowledge, skill and ability requirements (KSAs) these express what the role holder needs to know and be able to do; behavioural competency requirements the types of behaviour required for successful performance of the role. An example of a role profile is given in Handout 2.3. Basic role profile (PowerPoint slide 2.4) While it is best to use a comprehensive profile as described in the last slide to provide a complete basis for a performance agreement, for the sake of simplicity some organizations just use a basic role profile. This limits the profile to a definition of the role s overall purpose and a list of the role s key result areas. In addition key performance indicators are defined which inform the selection of performance goals in the shape of targets or standards. Use of a role profile (PowerPoint slide 2.5) A full role profile provides the basis for setting goals and therefore for planning, monitoring and reviewing performance. Additionally it provides information which is used to prepare performance development and personal development plans. A basic role profile provides a more limited but still important framework for setting performance goals. PUBLISHED BY KOGAN PAGE

5 LEARNING MODULES 49 Developing a role profile (PowerPoint slide 2.6) Questions to be answered: 1 What is the overall purpose of the role? 2 How does the role contribute to the achievement of the organization s strategic goals? 3 What are the key result areas in the role which define what has to be achieved (no more than five or six)? 4 What will indicate how well the role holder has performed in each key result area (the key performance indicators)? 5 How are the key result areas aligned to the key result areas of the organization? 6 What is the role holder expected to know to be able to carry out the role? 7 What skills are needed to carry out the role? 8 By reference to the headings in the organizational competency framework, what behavioural competencies are required for successful role performance? Use of Exercise 2.1 This exercise provides a useful introduction to the art of drawing up a role profile from a role analysis. It is suitable for those without experience in carrying out roles who would be unable to take part in Exercise 2.2. But it could provide those with such experience valuable insights into role profile definition which they can put into practical use in Exercise 2.2. MICHAEL ARMSTRONG, 2015

6 50 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT CONDUCTING EXERCISE State the objectives of the exercise: To enable participants to understand the purpose and nature of a basic role profile and know how to prepare one. 2 Issue Handout 2.2 on role profiles and how to define them. 3 Ask participants to study an example of a basic role profile (Handout 2.3). 4 Issue the transcript of a role analysis interview (Briefing Note 2.1). 5 Divide the whole group into pairs and ask each pair to work together and, on the basis of the information provided by the role analysis interview, produce a basic role profile with a definition of overall purpose and no more than five or six key result areas. (30 minutes) 6 Explain that they will have to rearrange the material in the briefing note (the interview transcription) to produce a succinct role profile. Much of the information is about how the work is carried out rather than the results the role holder has to achieve. (This is a typical feature of such an interview, role holders often find it difficult to distinguish between what they do and why they do it). The superfluous task-based data will have to be eliminated if the result is to be a useable role profile, ie one with no more than five or six key result areas, each of which is expressed in one sentence. 7 Issue Document 2.1 on which participants record their conclusions on the overall purpose and key result areas of the role, but tell them not to complete the columns referring to key performance indicators and goals at this stage. These will be completed in later exercises (2.3 and 2.4). 8 Look at the resulting role profiles (or a sample if time is limited) and comment to the group on the outcomes (strengths and weaknesses). Do not refer in your comments to any individual. (20 minutes) 9 Ask the members of the group to comment on their experience. (15 minutes) 10 Summarize to the group the lessons learnt. Refer as necessary to the key result areas which have been produced for this role as set out in Document 2.2 which could be issued to participants. But only use this when it will help to give an example. It is better to distil one from the profiles produced by the group. (10 minutes) PUBLISHED BY KOGAN PAGE

7 LEARNING MODULES 51 BRIEFING NOTE 2.1 Transcript of a role analysis interview The following is an edited transcript of an interview conducted by an analyst to provide the information required to prepare a role profile for a quality control technician in a food manufacturing company. The transcript refers to the main questions put by the analyst during the interview but the various supplementary questions have been omitted. The answers to the main questions are set out below: Could you briefly summarize the main purpose of your job what you are here to achieve? I am responsible for the quality control of the four products on our cooked meats product line. I have to check that they meet our quality standards. I also check to ensure that we conform to food hygiene standards and regulations. How do you do this? As far as quality control is concerned, I have to know all about the specifications for each of the four products. This includes the basic ingredients, the mix of these ingredients, taste and smell, appearance and usability. I do this by conducting regular tests of a sample of products. I also check the labelling and packaging from time to time to ensure that these are in line with the specifications. What sort of tests do you carry out? Our quality control guide lays down the standard tests and sample sizes. There is a range of tests including microbiological and chemical tests. Some are quite complex, others, such as visual tests of appearance, are relatively straightforward. When it comes to tasting I have to use my judgement. I know what the product should taste like and I have to do my best to identify any difference significant enough to warrant action. We do have tasting panels which meet regularly to check on products. I organize the tasting panel for my products but this is a longerterm process the main purpose of which is influenced by the product specification. However, I am the first line of defence and it is up to me to spot any immediate problems so that they can be put right. What do you do about test results? If there is a problem, I refer it initially to the product line manager so that she can deal with any issue over which she has control. I am expected to offer my opinion on what needs to be done if this is suggested by test results. If it is a more fundamental problem concerning such things as ingredients, the mix or production methods the product line manager will refer them to product development. I am usually involved in explaining my findings there. I submit regular (monthly) reports to the manager of the product line and to the quality control manager (my boss). My reports are also sent to the product MICHAEL ARMSTRONG, 2015

8 52 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT development department. They summarize the results of the tests and highlight any issues which in my view need to be addressed. I am not expected to make recommendations on how the issue should be resolved although my opinion is sometimes sought by manufacturing and product development. I also attend regular quality control meetings where I am expected to report on any issues and join in discussions. What about the hygiene side of your responsibilities? Although this does not take up as much time as my routine testing activities, this is a vital aspect of my work. I have to be fully aware of our own hygiene standards, which are rigorous. But I must also be completely au fait with the UK food regulations and, importantly, those of the EU (we export quite a lot to the EU). I also have to know a lot about methods of ensuring that the standards are maintained and what sort of actions can be taken to deal with any problems. My job is to carry out hazard analyses at fixed stages of the production process we call them critical control points. I use a checklist to do this but I am expected to delve into hygiene issues which are not specifically covered by the checklist. I have to know what I am looking for. If I identify a hazard I report it immediately to the product line manager, explaining exactly what the problem is and making suggestions on what action should be taken. I am the expert on hygiene for the line. The action may involve stopping the production line and in an emergency I have the authority to do that (only that has never happened in my time). Do you have contacts with customers? Not directly but if a customer (a store or an individual) complains about one of my products, customer services ask me to investigate it and report to them on whether there is a problem and if so what. This may involve testing samples sent in by customers. It is up to customer services to decide how to deal with the complainer. How do you know that you have done a good job? Clearly, I will have done a good job if the tests and inspections I carry out are conducted thoroughly in accordance with the requirements of our quality control guide and by reference to hygiene regulations. I have to earn the respect of the product line manager as someone who knows what she is talking about. My reports need to be clear, readable and submitted on time. My opinions on quality and hygiene must be evidence-based and I must be able to support my conclusions with that evidence. I will have done a good job if I offer relevant and practical comments and suggestions to the product line manager, my boss and the product development department. I will also have done a good job if I respond promptly to requests from customer services to deal with customer complaints and provide them with the information they need to deal with the complaint. PUBLISHED BY KOGAN PAGE

9 LEARNING MODULES 53 Document 2.1 Basic role profile record Key result areas Key performance indicators Goals MICHAEL ARMSTRONG, 2015

10 54 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT Document 2.2 Key result areas for a quality control technician 1 Conduct tests to establish the extent to which a range of food products meets quality standards. 2 Monitor the achievement of food hygiene standards and conduct tests to establish the extent to which company and national/international standards are being achieved for the range of products. 3 Recommend actions to remedy quality or hygiene problems identified by the tests. 4 Prepare replies for customer services to send to customers who have complained about the quality of any item in the product range. 5 Prepare regular reports summarizing test results and findings. 6 Contribute to reviews of how quality and hygiene standards can be improved. PUBLISHED BY KOGAN PAGE

11 LEARNING MODULES 55 SESSION 2.3 EXERCISE 2.2 PREPARING A ROLE PROFILE (2) Use of Exercise 2.2 This exercise is for use by participants who have experience in carrying out roles. It can therefore act as an alternative to Exercise 2.1 which is designed for those without experience. However, both exercises could be used. Exercise 2.1 provides an example of a role analysis for conversion to a role profile and can therefore provide a valuable introduction to the art of drawing up a role profile which could be put to good use when exploring the practicalities of Exercise 2.2. MICHAEL ARMSTRONG, 2015

12 56 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT CONDUCTING EXERCISE State the objectives of the exercise: To provide participants with practice in preparing a real life role profile, ie one based on the actual roles they carry out. 2 Ask the group to split up into pairs. 3 Explain that in carrying out this exercise they should refer to their experience of completing Exercise Ask members of each pair to interview in turn the other member of the pair about his or her role and write up a basic role profile which includes definitions of the role s overall purpose and its key result areas (no more than five or six). (30 minutes) 5 Issue Document 2.3 on which to record their conclusions on the overall purpose and key result areas of the role, but tell participants not to complete the columns referring to key performance indicators and goals at this stage. These will be completed in later exercises (2.3 and 2.4). 6 Look at the resulting role profiles (or a sample if time is limited) and comment to the group on the outcomes (strengths and weaknesses). Do not refer in your comments to any individual. (15 minutes) 7 Ask the members of the group to comment on their experience. (10 minutes) 8 Summarize lessons learnt. (5 minutes) PUBLISHED BY KOGAN PAGE

13 LEARNING MODULES 57 Document 2.3 Extended role profile record Role title: Overall purpose of role: Key result areas The elements of a role (no more than five or six) for which clear outputs and standards exist, each of which makes a significant contribution to achieving its overall purpose Key performance indicators Show how performance in a key result area can be measured or assessed Goals Define what has to be accomplished in a key result area in the form of performance targets or standards MICHAEL ARMSTRONG, 2015

14 58 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT SESSION 2.4 PRESENTATION AND EXERCISE 2.3 DEFINING KEY PERFORMANCE INDICATORS Introductory presentation by programme leader Key performance indicators defined (PowerPoint slide 2.7, Handout 2.4) Key performance indicators (KPIs) are the metrics or other sources of information which can be used to indicate how results can be measured. They are referred to when setting performance goals (there is no point in an immeasurable goal) and assessing performance by reference to those goals. Method of defining key performance indicators (PowerPoint slide 2.8) Answer the question for each key result area: How will we know when the results specified in this area have been achieved? KPIs defined as metrics (PowerPoint slide 2.9) Wherever possible a KPI should be a quantified measure expressed as a performance metric. For example: performance records eg sales, output, costs, wastage etc; statistics eg speed of response, number of complaints, employee turnover, health and safety; quality of performance accuracy, timeliness; customer (external and internal) feedback from survey results; level of employee engagement from survey results. If this is absolutely impossible, the KPI will have to refer to a qualitative statement. Qualitative KPIs (PowerPoint slide 2.10) If it is absolutely impossible to identify a metric as a KPI a qualitative statement has to be used which answers the question: How do we know when this task has been well done? by reference to evidence of behaviour in a key result area. For example: if a key result area for a call centre agent is Deal with customer queries and complaints, the KPI could be a sample of recorded conversations with customers to establish the extent to which responses were helpful and polite; if a key result area for a management accountant is: Help managers with advice on their budgetary control responsibilities, the KPI could be expressed as evidence is obtainable that the advice is sound and readily available. PUBLISHED BY KOGAN PAGE

15 LEARNING MODULES 59 Example of key performance indicators for a production manager (PowerPoint slide 2.11) Production output and throughput records. Records of productivity in terms of output per person and costs in terms of cost per unit of output. Information showing that production schedules and plans are realistic and implemented effectively. Quality control reports showing results against standards and targets. Safety records showing frequency rate of accidents. Results of employee engagement surveys. Arrangements for Exercise 2.3 In order to make this exercise as close as possible to real life it should follow on from Exercise 2.2 and be carried out by the same pairs who were involved in that exercise. It could follow Exercise 2.1 if this were the sole exercise undertaken by participants without appropriate work experience. CONDUCTING EXERCISE State the objectives of the exercise: To understand the nature and use of key performance indicators and to practise preparing them. 2 Ask the whole group to split up into the same pairs as in Exercise 2.1 or Ask the pairs to refer to the role profile prepared in Exercise 2.1 or Ask them to define possible key performance indicators for each of the key result areas set out in the profile and enter their definitions in the second column of Document 2.2 or 2.3. (30 minutes) 5 Conduct a general discussion on what has been accomplished. (20 minutes) 6 Issue Handout 2.4 which includes examples of key performance indicators. MICHAEL ARMSTRONG, 2015

16 60 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT SESSION 2.5 PRESENTATION AND EXERCISE 2.4 SETTING GOALS Introductory presentation by programme leader Setting goals (Handouts ) Having prepared a role profile and defined the key performance indicators, setting goals for each key result area is one of the three most important performance management processes, the other two being the provision of feedback and the conduct of performance reviews. A popular basis for goal setting is the SMART acronym in which S stands for specific (sometimes stretching), M for measurable, A for agreed, R for realistic and T for time-related and trackable. Definition of a goal (PowerPoint slide 2.12) A goal or objective defines what someone has to accomplish. The basis for goal-setting (PowerPoint slide 2.13) The basis for goal setting is provided by definitions of key result areas contained in a role profile. This spells out expected outcomes for an individual role and may also list the competencies required. The basic goals derived from the role profile consist of performance targets and performance standards. Goals can also be set for competency requirements and for what individuals are expected to learn (learning goals). Types of goals (PowerPoint slide 2.14) A performance target defines the quantifiable results to be attained in a key result area as measured in such terms as output, throughput, sales, income, cost reduction, levels of service delivery or reduction of reject rates. A performance standard describes the conditions that exist when a task is well done. It is defined in the form of a statement that performance will be up to standard if a specified result happens. Performance standards are used when the goal cannot be quantified as a target. Criteria for goals (PowerPoint slide 2.15) The criteria for an effective performance goal in the form of a target or standard are that it should be: Aligned Relevant PUBLISHED BY KOGAN PAGE

17 LEARNING MODULES 61 Precise Measurable Trackable Challenging Achievable Agreed Time-related Definitions of these criteria are contained in Handout 2.6 SMART goals (PowerPoint slide 2.16) A simpler version of the criteria for an effective goal is frequently used by organizations in the form of the acronym SMART where, S = specific (sometimes stretching) M = measurable A = agreed (also aligned*) R = realistic T = time-related (also trackable) * Individual goals are aligned to corporate goals The performance goal setting sequence an example for a plant production manager (PowerPoint slide 2.17) Key result area Achieve safety targets and standards Key performance indicator The accident frequency rate Performance goal Reduce the frequency rate by 10 per cent within the next 12 months MICHAEL ARMSTRONG, 2015

18 62 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT CONDUCTING EXERCISE State the objectives of the exercise: To practice the skills involved in setting goals. 2 Ask the group to split up into the same pairs as in Exercise Ask each pair to refer to the role profile with key performance indicators they prepared in that exercise. 4 Issue Handout 2. 5 on setting goals. 5 Issue Handout 2.6 on the criteria for goals. 6 Ask the pairs to refer to the role profile and the handouts and use the methodology described there to select goals, indicating whether they are performance target or performance standards, for each key result area. (20 minutes) 7 Look at the results produced by each pair (or a sample if time is limited) and comment to the group on the outcomes (strengths and weaknesses). Do not refer in your comments to any individual. (15 minutes) 8 Ask the members of the group to comment on their experience. (15 minutes) 9 Summarize to the group the lessons learnt. (10 minutes) PUBLISHED BY KOGAN PAGE

19 LEARNING MODULES 63 SESSION 2.6 PRESENTATION AND EXERCISE 2.5 ALIGNING INDIVIDUAL PERFORMANCE GOALS WITH BUSINESS GOALS Introductory presentation by programme leader (Handout 2.7) The concept of strategic performance management is based on the proposition that the interests of the organization are best served if individual goals are aligned to corporate goals and values. But this is easier said than done. How, line managers ask, can we align the goals for a junior member of staff in a relatively routine job with the distant and broadly defined strategic goals of the organization, assuming we are aware of them? Making managers aware of corporate goals is an essential responsibility of top management. Organizations often communicate these annually at the start of the performance management cycle with guidelines on what they imply for the setting of individual employees, sometimes with examples. But even when this does happen, and it is by no means a universal approach, line managers may find the translation of corporate to individual goals difficult. To simplify it, only a general statement of alignment is called for. In practice, aligned goals may be defined for all or a selection of the key result areas. The next exercise (2.6) is concerned with the alignment of values. Strategic alignment of performance goals (PowerPoint slide 2.18) The strategic alignment of performance goals means that individual goals are set which will make a specified contribution to the achievement of the strategic goals of the organization. Achieving strategic alignment (PowerPoint slide 2.19) Alignment is achieved by seeing that everyone is aware of corporate goals and that the goals they agree for themselves are consistent with them and, if achieved, will support the achievement of the corporate goals. The process of strategic alignment (PowerPoint slide 2.20) 1 Top management defines at the start of the performance management cycle the corporate strategic goals with which individual goals should be aligned. 2 The key result areas of a role which can be aligned to these corporate goals are identified. 3 For each of the identified areas, individual goals are determined which, if achieved, will specifically contribute to the achievement of corporate goals. 4 A note is made of these aligned goals so that particular attention is paid to them when monitoring and reviewing performance. MICHAEL ARMSTRONG, 2015

20 64 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT Strategic alignment of goals (PowerPoint slide 2.21) Influenced by external factors: Corporate goals Influenced by internal factors: Compe on Func onal goals Strategic plans Market factors Resources available Customer feedback Departmental/Team goals Core values Legisla on Individual goals Performance Two-way process of aligning goals (PowerPoint slide 2.22) CORPORATE Define and underline the significance a ached to customer service by the organiza on and set corporate goals for achieving the levels of service required. FUNCTION Define opera onal goals for aspects of customer service for which func on is responsible in such terms as quality, value-for-money, responsiveness and courtesy. DEPARTMENT/TEAM Agree opera onal standards for service delivery and targets for improvement in each of the areas covered in the func onal strategy. Ensure targets are in line with and support the achievement of func onal and corporate strategic goals. INDIVIDUAL Agree individual standards for customer service and improvement targets which support the achievement of corporate, func onal and team goals. Define competencies and skills required and agree steps to develop them. PUBLISHED BY KOGAN PAGE

21 LEARNING MODULES 65 CONDUCTING EXERCISE Define the objectives of the exercise. To provide participants the opportunity to understand the process of business goal alignment. 2 Issue Briefing Note 2.2 containing the summary statement of the Acme Group s business strategy and the basic role profile for the Divisional Procurement Manager. 3 Issue Handout 2.7 on strategic alignment. 4 Divide the group into pairs. 5 Ask each pair to look at the key result areas set out in the role profile and suggest any goals that will support the achievement of the Acme Group s business strategy. (10 minutes) 6 Look at the results produced by each pair (or a sample if time is limited) and comment to the whole group on the outcomes (strengths and weaknesses). Do not refer in your comments to any individual. (10 minutes) 7 Ask the members of the whole group to comment on their experience, mentioning any difficulties. (10 minutes) 8 Discuss how any difficulties might be resolved. (10 minutes) 9 Summarize the lessons learnt. (5 minutes) MICHAEL ARMSTRONG, 2015

22 66 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT BRIEFING NOTE 2.2 Strong brands and innovation are central to our ambition to double in size. We are investing in brand equity, finding and strengthening the connections between consumers and the products they buy. Where equity is strong, we are leveraging it creating efficiencies by focusing on fewer, bigger projects that enhance margins. And we are seeking superior products which consumers will prefer, driving profitable growth. Role Profile Role title: Divisional Procurement Manager Overall purpose of role: To source and purchase high-quality goods at competitive prices for the kitchen products division. Key result areas: 1 Control purchase of existing products from current suppliers. 2 Negotiate prices and agree contracts. 3 Research and identify new products and suppliers. 4 Assess tenders from potential suppliers. Summary of business strategy of the Acme Group (producers of a range of household goods) 5 Ensure that suppliers deliver on time products which meet quality and cost specifications. PUBLISHED BY KOGAN PAGE

23 LEARNING MODULES 67 SESSION 2.7 PRESENTATION AND EXERCISE 2.6 ALIGNING INDIVIDUAL BEHAVIOURS WITH CORPORATE VALUES Introductory presentation by programme leader The rationale for aligning individual behaviours with corporate values (PowerPoint slide 2.23) Aligning individual behaviours to corporate values is necessary as a means of ensuring that espoused corporate core values (the basic values adopted by an organization which set out what is believed to be important about how people and the organizations should behave) become values in use, ie practised generally by members of the organization. To do this, individuals must be aware of what the corporate values are and how their behaviour can be aligned to them. CONDUCTING EXERCISE State the objective of the exercise: To practice the skills involved in aligning individual and corporate values. 2 Refer to the section on aligned values Handout 2.7 (issued in Exercise 2.5). 3 Issue Briefing Note 2.3 which includes a summary statement of the business values of Super Stores (a supermarket chain) and a generalized description of the role of a store manager. It also includes the company s competency framework for managers. 4 Divide the group into pairs and ask each pair to look at the key result areas set out in the role profile of a store manager and describe the aspects of behaviour which are most likely to support the attainment of the company s business values. (10 minutes) 5 Look at the results produced by each pair (or a sample if time is limited) and comment to the group on the outcomes (strengths and weaknesses). Do not refer in your comments to any individual. (10 minutes) Ask the members of the group to comment on their experience, mentioning any difficulties. (10 minutes) Discuss how any difficulties might be resolved. (10 minutes) Summarize the lessons learnt. (5 minutes) MICHAEL ARMSTRONG, 2015

24 68 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT BRIEFING NOTE 2.3 These notes summarize the business values of Super Stores and the role of a Store Manager. Business values The business values of Super Stores as set out in their annual report are: Our vision: To be the most trusted retailer where people love to work and shop. Our goal: To make all our customers lives easier every day by offering great quality and service at fair prices. Role The role of store manager is summarized as follows by the company: In general the role of a store manager is to deliver a great shopping experience in a safe and secure environment for all the company s customers. To achieve this store managers should put customers at the heart of everything they do; leading, coaching and engaging with colleagues; promoting a sales culture; and personifying the company s values. Specifically they are responsible for: managing and motivating a team to increase sales; overseeing recruitment and training of staff; keeping track of stock and ordering through computerized systems; organizing sales promotions and in-store events; serving customers when required; dealing with queries, complaints and feedback from customers; analysing sales figures and forecasting future sales volumes; maintaining awareness of market trends and monitoring what competitors are doing; controlling budgets and costs; providing reports to senior company executives. PUBLISHED BY KOGAN PAGE

25 LEARNING MODULES 69 SESSION 2.8 PRESENTATION AND EXERCISE 2.7 DEFINING KNOWLEDGE AND SKILLS REQUIREMENTS Introductory presentation by programme leader (Handout 2.8) This exercise in defining knowledge and skills requirements follows on from Exercises 2.1 or 2.2 and is the first step to completing a full role profile (the second step of defining behavioural competency requirements is covered in Exercise 2.8). Together, these constitute the critical success factors or role requirements which complete a role profile to provide the basis for development planning. The definition of the knowledge and skill requirements for a role is the starting point for the important performance management processes of development planning and coaching. But it is not always an easy thing to do, even by HR professionals. And line managers may find it hard because it is entirely outside their experience. So if this aspect of performance is pursued, which it should be, and if line managers are to be involved, as they should be, so far as possible, then practice in carrying out the analysis provided by this exercise is essential. They should be able to get help and guidance from HR specialists. But the more they can do it for themselves the better. Rationale for defining knowledge and skill requirements (PowerPoint slide 2.24) A definition of the knowledge and skill requirements for a role will provide an important platform for developing performance. Understanding them will enable managers and individuals to identify any personal development needs and any gaps or deficiencies which are affecting performance. This provides a basis for setting learning goals and for development planning. Defining knowledge and skill requirements (PowerPoint slide 2.25) Knowledge and skills requirements are defined by answering two questions: 1 What does the role holder need to know to perform this role well? 2 What should the role holder be able to do to perform this role well? Identifying knowledge and skills requirements (PowerPoint slide 2.26, Handout 2.8) Take each key result area in turn and obtain answers to the following questions: 1 What do you have to know to achieve the results expected in this area? The areas to be covered are knowledge of: administrative and operational procedures; facts and other relevant information; systems of work including technical and administrative processes; MICHAEL ARMSTRONG, 2015

26 70 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT management principles and techniques; scientific, technical or professional subjects or matters relevant to the role; the business its operations and how it makes money. 2 What do you have to be able to do to carry out this aspect of the role? The skills areas to be covered are: leading and motivating people; working with colleagues (team-working); dealing with customers and clients; planning and prioritizing; problem solving and decision making; analytical and critical thinking; interpreting data; handling processes or procedures; communicating writing or speaking; physical (guide) skills. CONDUCTING EXERCISE State the objective of the exercise: To practice the skills involved in analysing the knowledge and skill requirements of a role. 2 Ask the group to split up into the same pairs as in Exercise 2.1 or Ask each pair to refer to the basic role profile they prepared in that exercise. 4 Issue Handout 2.8 on defining knowledge and skills requirements. 5 Ask the pairs to refer to the handout and use the methodology described there to identify knowledge and skills requirements, taking each key result area in the role profile in turn. It is possible that knowledge and skill requirements may be similar in more than one key result area. (20 minutes) 6 Look at the results produced by each pair (or a sample if time is limited) and comment to the group on the outcomes (strengths and weaknesses). Do not refer in your comments to any individual. (10 minutes) 7 Ask the members of the group to comment on their experience. (10 minutes) 8 Summarize to the group the lessons learnt. (5 minutes) PUBLISHED BY KOGAN PAGE

27 LEARNING MODULES 71 SESSION 2.9 PRESENTATION AND EXERCISE 2.8 IDENTIFYING BEHAVIOURAL COMPETENCY REQUIREMENTS This exercise is the final step to completing a full role profile. Introductory presentation by programme leader (Handout 2.9) Behavioural competencies (PowerPoint slide 2.27) Behavioural competencies are measurable aspects of a person s behaviour that result in effective or superior performance. They may be generally applicable as defined in an organization s competency framework. Or they may be specially defined for an individual role, referring to the headings of the framework, if there is one. The rationale for defining competency requirements (PowerPoint slide 2.28) The definition of the behavioural competency requirements for a role is useful because it provides the basis for: helping people to appreciate what behaviour is expected of them; analysing the reasons for any behavioural issues to guide agreement on a development plan. Identifying behavioural competency requirements (PowerPoint slide 2.29) Take each key result area in turn and obtain an answer to the following question: what sort of behaviour is likely to lead to effective performance in this area? The headings under which behaviour could be analysed will be found in an organization s competency framework, if it has one. If not, reference could be made to the typical list of headings set out below. Behavioural competency headings (PowerPoint slide 2.30) The following are typical behavioural competency headings in alphabetical order. Achievement/results orientation Business awareness MICHAEL ARMSTRONG, 2015

28 72 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT Communication Customer focus Developing others Flexibility Leadership Planning Problem solving Teamwork CONDUCTING EXERCISE State the objectives of the exercise: To practise the skills involved in analysing the behavioural competency requirements of a role. 2 Ask the group to split up into the same pairs as in Exercise 2.1 or Ask each pair to refer to the basic role profile they prepared in that exercise. 4 Issue Handout 2.9 on defining behavioural competency requirements. 5 Ask the pairs to refer to the handout and use the methodology described there to identify knowledge and skills requirements, taking each key result area in the role profile in turn. It is possible that knowledge and skill requirements may be similar in more than one key result area. (20 minutes) 6 Look at the results produced by each pair (or a sample if time is limited) and comment to the group on the outcomes (strengths and weaknesses). Do not refer in your comments to any individual. (10 minutes) 7 Ask the members of the group to comment on their experience. (10 minutes) 8 Summarize to the group the lessons learnt. (5 minutes) PUBLISHED BY KOGAN PAGE

29 LEARNING MODULES 73 SESSION 2.10 PRESENTATION AND ROLE PLAYING EXERCISE 2.1 DEVELOPMENT PLANNING Introductory presentation by programme leader (Handout 2.10) The nature of a development plan (PowerPoint slide 2.31) A development plan provides a framework which, as necessary, enables people: 1 To extend their knowledge of the techniques, systems, processes, procedures and tools they need to carry out their role. 2 To build on existing skills or develop any new skills needed to perform well in their role. 3 To refine behaviours in order to meet the behavioural competency requirements of the role. 4 To acquire different experiences which will help to develop knowledge, skills and potential. Characteristics of a development plan (PowerPoint slide 2.32) A development plan should: focus on fundamental development needs; be achievable within a defined time scale; be limited to three development areas; be agreed by individuals with their line manager; be based on analyses by both the manager and the individual prior to any formal meeting to define and agree development needs (this could be the mid- or endyear performance review meeting or, better, a specially convened development meeting following the performance review); set out a clear development action plan which can take one or more of the following forms for the individuals concerned: learning for themselves (self-managed learning) but with access to learning resources and with help and guidance as required from their manager or a learning and development specialist; coaching or taking part in more formal learning events (in-company or external learning programmes); additional appropriate experience. MICHAEL ARMSTRONG, 2015

30 74 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT be monitored in order to check on progress in implementing the plan; be updated and revised whenever necessary during the year rather than waiting for a mid- or end-year meeting. Example of a development plan (PowerPoint slide 2.33) Agreed development plan for: James Booth Role: Assistant Management Accountant Area for development Note the three most important areas for the development of knowledge, skills or behaviour Knowledge: Needs to know more about zero-based budgeting Skills: Needs to develop skills in presenting budgetary control information to managers Competencies: Needs to develop leadership competencies Method of development Indicate what method of development should be used eg coaching, selfmanaged learning using learning resources such as e-learning, mentoring, formal training Three-day learning programme run by Camden Metropolitan University Coaching by Management Accountant Timing Indicate when the development activity should take place 5th June next year Attend next company three-day leadership development learning programme By end February next year 15th January next year Progress PUBLISHED BY KOGAN PAGE

31 LEARNING MODULES 75 Development planning: points for consideration by a manager when preparing for a development planning meeting (PowerPoint slide 2.34) 1 On the basis of what I know and have observed about the employee s performance: Are there any areas of knowledge about the techniques, systems, processes, procedures or tools required which need to be developed or extended? Are there any skills demanded by the role which need to be developed or acquired? Is there any evidence that changes in behaviour (levels of competency) are desirable in such areas as leadership, team-working or relationships with internal or external customers? 2 In the light of the above, what are the three most important areas for development which need to be included in a development plan? 3 What type of development would be appropriate? Select the action required from these methods: coaching; self-managed learning using learning resources such as e-learning; mentoring; formal training; additional appropriate experience. Development planning: Points for consideration by an employee when preparing for a development planning meeting (PowerPoint slide 2.35) What do I want to achieve this year and longer term? What are my greatest strengths and how can I build on them? Are there any aspects of my work in which I feel I am not performing as well as I could? If so, is the problem insufficient knowledge, skill or experience or what? Do I think I can learn all I need on the job? If so, is there any way in which I can be helped to learn? Could l benefit from additional experience within my department or elsewhere? Could I benefit from any formal training, within or outside the organization? If so, what sort of training? What are my three most pressing development needs? MICHAEL ARMSTRONG, 2015

32 76 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT CONDUCTING THE ROLE PLAY When planning the role play refer to the guidelines for role play facilitators provided in Briefing Note R4 (page 11). It is assumed that the role play will be conducted on a small group basis, ie the whole group is divided into small groups and two people in each of the groups take part in the role play. But as explained in R4 it could be conducted by two players in front of the whole group. 1 State the objective of the role play: To help participants understand the nature and use of a development plan and to provide them with practice in preparing a plan. 2 Explain that the role play which will now be conducted is concerned with the preparation and agreement of a development plan. Notes for guidance on development planning are available in Handout Summarize the purpose and nature of role plays and indicate what role players do as set out in briefing notes R1 and R2 (page 9). Then issue the briefing notes. 4 If the role play is to be carried out by two participants in front of the whole course, ask for volunteers (they are usually forthcoming) but if not, appoint two people who appear to be able to perform the role play on the basis of observed previous behaviour during the programme. 5 Issue the briefs for the two roles that of the team leader network development (Briefing Note 2.4) and the network architect (Briefing Note 2.5). 6 Ask the role players to: (a) read their respective briefs. (5 minutes) (b) separately prepare for a joint meeting by completing a development plan on Document 2.4. (5 minutes) (c) meet each other to reach agreement on the development plan. (20 minutes) 7 Ask those not playing a role to provide feedback on how it went to the role players guidelines for observers are contained in Briefing Note R3 page 10. (15 minutes) 8 Ask the observers to provide their feedback and discusses the lessons learnt with all the participants on the programme. (15 minutes) PUBLISHED BY KOGAN PAGE

33 LEARNING MODULES 77 BRIEFING NOTE 2.4 Brief for Team Leader Network Development You are Charlie Smith and work as a team leader at Crescent Systems Ltd, a mediumsized but profitable and rapidly growing computer systems and software design firm. Your network team uses network technology to design or modify networks for clients, mainly in the financial services sector. A computer or data network enables computers to exchange data and allows computing resources to be shared. The team is concerned with network topology, ie the layout or organizational hierarchy of interconnected nodes of a computer network (a node is a connection, redistribution or communication point that is attached to a network, and is capable of sending, receiving, or forwarding information over a communications channel). You are about to prepare for a meeting with Jo Blyth, a network architect in your team. Jo has 12 years experience in software development and designing networks since gaining a 2(2) degree in business information systems from Greenwich University. Jo became a specialist in network design after working eight years in Zenith Computer Solutions and joined Crescent Systems as a network designer four years ago. Jo s role involves dealing with traditional local area network (LAN) technology known as Ethernet. Jo also uses Ethereal, wide area network (WAN) optimization software and Web Cache Communication Protocol (WCCP) However, Jo s younger and more recently qualified colleagues are becoming increasingly involved in developing fabrics, a flattened, federated network architecture that replaces the old point-to-point relationships of the past with much more dynamic multipointto-multipoint architectures. Jo finds it difficult to keep up with them and is no longer a good team player. In fact Jo has recently sparked off some disputes which have seriously damaged the quality of team work essential for success in the business. Jo has admitted that there are problems largely because the other team members seem to be talking different languages. Jo also liaises with the firm s database team which designs database management systems (DBMS) suites of computer software providing the interface between users and databases. Jo s team often works closely with the database team on assignments involving the comprehensive development of computer systems. Jo is familiar with database software produced by Microsoft, Oracle or SAP and has the necessary skills to use the software often in joint projects with the database team. But that database team is moving rapidly into cloud computing applications allowing workers to log into a web-based service which hosts all the programs they need. The extent to which Jo knows how cloud computing works or has the skills to apply it in conjunction with the experts in the database team is unclear. But there is some evidence that Jo s relationships with members of the database team are not as good as they used to be. MICHAEL ARMSTRONG, 2015

34 78 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT The firm has recently introduced a new performance management system in which the agreement of plans to develop performance play an important part. You are now going to record your views on a development plan for Jo Blyth on Document 2.4. You will then meet Jo soon to discuss and agree Jo s development plan for the coming year. You have been given the following notes on development planning by HR: Development plans Development plans provide a framework that helps colleagues to build new skills, refine behaviours and acquire different experiences. They are an important way for colleagues to agree with their managers how to achieve personal and business improvement. Development plans are living, breathing documents that continually evolve. They should be reviewed and updated through regular one-to-one conversations between the manager and the colleague in order to truly represent how the latter has owned their development throughout the year. Line managers have an important role to play in supporting colleagues with their development plans to build on areas of strength and identify knowledge and skills gaps and any work problems. Development plans should: focus on fundamental development needs; be achievable within a defined time scale; be limited to three development areas to be agreed by individuals with their line manager; be based on analyses by both the manager and the individual prior to any formal meeting to define and agree development needs; set out a clear development action plan which can take one or more of the following forms for the individuals concerned: learning for themselves (self-managed learning) but with access to learning resources and with help and guidance as required from their manager or a learning and development specialist; coaching or taking part in more formal learning events (in-company or external learning programmes); additional appropriate experience; be monitored in order to check on progress in implementing the plan and updated whenever necessary during the year rather than waiting for a formal review meeting. PUBLISHED BY KOGAN PAGE

35 LEARNING MODULES 79 BRIEFING NOTE 2.5 Brief for Network Architect You are Jo Blyth and work at Crescent Systems Ltd, a medium-sized but profitable and rapidly growing computer systems and software design firm. You are the member of a network development team led by Charlie Smith. You have been involved with computers for over 12 years since gaining a 2(2) degree in business information systems from Greenwich University. You became a specialist in network design with your former employer and joined Crescent Systems in your present role four years ago. The network team uses network technology to design or modify networks for clients, mainly in the financial services sector. A computer or data network enables computers to exchange data and allows computing resources to be shared. The team is concerned with network topology, ie the layout or organizational hierarchy of interconnected nodes of a computer network (a node is a connection, redistribution or communication point that is attached to a network and is capable of sending, receiving, or forwarding information over a communications channel). Your role involves the use of traditional local area network (LAN) technology known as Ethernet. You also use Ethereal, wide area network (WAN) optimization software and Web Cache Communication Protocol (WCCP). But your younger and recently qualified colleagues are becoming more involved in fabrics ie a flattened, federated network architecture that replaces the old point-to-point relationships of the past with much more dynamic multipoint-to-multipoint architectures. You are finding it difficult to keep up with them and, because they seem to be talking different languages, you don t get on as well with them as you used to do. There have recently been occasions when you have has serious differences of opinion with other members of the team because they do not see the work from your point of view. On behalf of your team you also liaise with the firm s database team which designs database management systems (DBMS) suites of computer software providing the interface between users and databases. Your team often works closely with the database team on assignments involving the comprehensive development of computer systems. You are familiar with database software produced by Microsoft, Oracle or SAP and have the necessary skills to use the software resulting from experience in your previous job and you have used them extensively in joint projects with the database team. But that database team is moving rapidly into cloud computing applications allowing workers to log into a web-based service which hosts all the programs they need. You fully understand how cloud computing works but do not have the skills to apply it in conjunction with the experts in the database team. As a result you feel left out of it and relationships are not as good as they might be. MICHAEL ARMSTRONG, 2015

36 80 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT The firm has recently introduced a new performance management system in which the agreement of plans to develop performance play an important part. You have just been asked to prepare for a meeting with your team leader, Charlie Smith, to discuss and agree a development plan for the coming year but you have been asked to prepare for the meeting by drafting a development plan for yourself on Document 2.4. The following notes for guidance have been issued by the firm: Development plans Development plans provide a framework that helps colleagues to build new skills, refine behaviours and acquire different experiences. They are an important way for colleagues to agree with their managers how to achieve personal and business improvement. Development plans are living, breathing documents that continually evolve. They should be reviewed and updated through regular one-to-one conversations between the manager and the colleague in order to truly represent how the latter has owned their development throughout the year. Line managers have an important role to play in supporting colleagues with their development plans to build on areas of strength, identify skills gaps and support career aspirations. Colleagues play an equally important part in preparing and agreeing their development plans. The plan should focus on the three most important development areas to address matters affecting knowledge, skills or behaviours. Ask yourself the following questions: What are your greatest strengths and how can you build on them? Do you have any development areas that make it difficult to do your job or prevent you from reaching your goals? Do you want to further develop a skill or area of knowledge? What development area will have the greatest impact on your performance? What support will you need to undertake development activities? In terms of activities, will you be learning on the job or will you need some learning options outside your role? Record your views on a development plan for yourself on Document 2.4. You will then attend a meeting with your manager to discuss and agree the plan. PUBLISHED BY KOGAN PAGE

37 LEARNING MODULES 81 Document 2.4 Development plan Area for development Note the three most important areas for the development of knowledge, skills or behaviour Method of development Suggest what method of development should be used eg coaching, selfmanaged learning using learning resources such as e-learning, mentoring, formal training MICHAEL ARMSTRONG, 2015

38 82 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT MODULE 2 HANDOUTS Handout 2.1 Performance agreements Definition of performance agreement A performance agreement is a summary of the joint decisions made during the planning stage of performance management. It covers: key result areas as defined in a role profile; key performance indicators; goals expressed as targets or performance standards; definitions of knowledge and skills and competency requirements; a development plan. Each of these components of a performance agreement is described in the relevant exercise in this module. Significance of performance agreements A performance agreement is used as a reference point when planning and reviewing performance and is therefore a key component of a performance management system. PUBLISHED BY KOGAN PAGE

39 LEARNING MODULES 83 Handout 2.2 Role profiles Role profile defined A role profile describes the key characteristics of a role the part played by individuals in fulfilling their work requirements. A full role profile specifies: 1 The overall purpose of the role what it exists to achieve. 2 Key result areas the elements of a role (no more than five or six) for which clear outputs and standards exist, each of which makes a significant contribution to achieving its overall purpose. 3 Knowledge, skill and ability requirements (KSAs) these express what the role holder needs to know and be able to do. 4 Behavioural competency requirements the types of behaviour required for successful performance of the role. Sections 3 and 4 can sometimes be grouped together under the heading critical success factors or role requirements meaning those aspects of a role that must go well to ensure success. Basic role profile While it is best to use a comprehensive profile as described in the last slide to provide a complete basis for a performance agreement, for the sake of simplicity some organizations just use a basic role profile. This limits the profile to a definition of the role s overall purpose and a list of the role s key result areas to which are added key performance indicators which inform the selection of performance goals in the shape of targets or standards that can be set. Use of a role profile A full role profile provides the basis for setting goals and therefore for planning, monitoring and reviewing performance. Additionally, and usefully, it provides information which is used to prepare performance development and personal development plans. A basic role profile provides a more limited but still important framework for setting performance goals. MICHAEL ARMSTRONG, 2015

40 84 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT Developing a role profile Questions to be answered: 1 What is the overall purpose of the role? 2 How does the role contribute to the achievement of the organization s strategic goals? 3 What are the key result areas in the role which define what has to be achieved (no more than five or six)? 4 What will indicate how well the role holder has performed in each key result area (the key performance indicators)? 5 How are the key result areas aligned to the key result areas of the organization? 6 What is the role holder expected to know to be able to carry out the role? 7 What skills are needed to carry out the role? 8 By reference to the headings in the organizational competency framework, what behavioural competencies are required for successful role performance? PUBLISHED BY KOGAN PAGE

41 LEARNING MODULES 85 Handout 2.3 Example of a role profile Role title: Database administrator Department: Information systems Overall purpose of role: responsible for the development and support of databases and their underlying environment. Key result areas Identify database requirements for all projects that require data management in order to meet the needs of internal customers. Develop project plans collaboratively with colleagues to deliver against their database needs. Implement project plans in accordance with defined criteria, within the predefined budget and within the agreed time scale. Support underlying database infrastructure to ensure that the level of service delivery required is achieved. Ensure security of the database infrastructure through adherence to established protocols and develop additional security protocols where needed. Role requirements Need to know Oracle database administration. Operation of oracle forms SQL/PLSQL, Unix administration, shell programming. Able to: Analyse and choose between options where the solution is not always obvious. Develop project plans and organize own workload on a time scale of 1 2 months. Adapt to rapidly changing needs and priorities without losing sight of overall plans and priorities. Interpret budgets in order to manage resources effectively within them. Negotiate with suppliers. Keep abreast of technical developments and trends, bring these into day-to-day work when feasible and build them into new project developments. MICHAEL ARMSTRONG, 2015

42 86 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT Behavioural competencies Aim to get things done well and set and meet challenging goals, create own measures of excellence and constantly seek ways of improving performance. Analyse information from range of sources and develop effective solutions/ recommendations. Communicate clearly and persuasively, orally or in writing, dealing with technical issues in a manner which can be readily understood by internal clients. Work participatively on projects with technical and non-technical colleagues. Develop positive relationships with colleagues as the supplier of an internal service. Fully aware of business needs in developing and operating the database. Use high levels of analytical thinking to deal with complex issues and the use of an effective logical approach to address work-related issues and problems. PUBLISHED BY KOGAN PAGE

43 LEARNING MODULES 87 Handout 2.4 Key performance indicators Key performance indicators defined Key performance indicators are the metrics or other sources of information which are used to indicate how results can be measured. They are referred to when setting performance goals (there is no point in an immeasurable goal) and assessing performance by reference to those goals. Key performance indicators as metrics Wherever possible a KPI should be a metric a measure providing data which indicate in quantitative terms the outcome of an activity, for example: sales value; output (units produced); throughput (units processed); productivity; achievement of quality standards; cost per unit of output; the volume of customer complaints, defective components (rejects) or waste; the speed with which orders are processed or enquiries dealt with. Qualitative KPIs If it is absolutely impossible to identify a metric as a KPI, a qualitative statement has to be used which answers the question How do we know when this task has been well done? by reference to evidence of behaviour in a key result area. For example: If a key result area for a call centre agent is Deal with customer queries and complaints, the KPI could be a sample of recorded conversations with customers to establish the extent to which responses were helpful and polite. If a key result area for a management accountant is Help managers with advice on their budgetary control responsibilities, the KPI could be expressed as evidence is obtainable that the advice is sound and readily available. Defining key performance indicators Answer the question for each key result area: How will we know when the results specified in this area have been achieved? MICHAEL ARMSTRONG, 2015

44 88 ARMSTRONG S PERFORMANCE MANAGEMENT TOOLKIT Example of key performance indicators for a production manager Production output and throughput records. Records of productivity in terms of output per person and costs in terms of cost per unit of output. Information showing that production schedules and plans are realistic and implemented effectively. Quality control reports showing results against standards and targets. Safety records showing frequency rate of accidents. Results of employee engagement surveys. PUBLISHED BY KOGAN PAGE

45 LEARNING MODULES 89 Handout 2.5 Setting goals Definition A goal or objective defines what someone has to accomplish. The basis for goal setting The basis for goal setting is provided by definitions of key result areas contained in a role profile. This spells out expected outcomes for an individual role and may also list the competencies required. The basic goals derived from the role profile consist of performance targets and performance standards. Goals can also be set for competency requirements and for what individuals are expected to learn (learning goals). Types of goals A performance target defines the quantifiable results to be attained in a key result area as measured in such terms as output, throughput, sales, income, cost reduction, levels of service delivery or reduction of reject rates. A performance standard describes the conditions that exist when a task is well done. It is defined in the form of a statement that performance will be up to standard if a specified result happens. Performance standards are used when the goal cannot be quantified as a target. The performance goal setting sequence an example for a plant production manager Key result area Achieve safety targets and standards Key performance indicator The accident frequency rate Performance goal Reduce the frequency rate by 10 per cent within the next 12 months MICHAEL ARMSTRONG, 2015