Werner Co. Performance Management Cycle and Compensation Guide

Transcription

1 Werner Co. Performance Management Cycle and Compensation Guide Summary: This document is intended to outline the Company s global performance management process. The performance management process intends to align employee development alongside company objectives to maximize excellence and growth. Sections: I. Annual Performance Review Cycle II. Goals & Objectives III. Competencies IV. Roles & Responsibilities a) Employee b) Manager c) Human Resources V. Training VI. Tools & Resources VII. Eligibility & Mid-Year Changes VIII. Compensation & Merit Process IX. Promotions & Demotions X. Performance Improvement Plan (PIP) Appendix A: Employee Competency Definitions 1

2 I. ANNUAL PERFORMANCE REVIEW CYCLE: The performance review process is a year-round process as regular feedback and performance discussions should occur throughout the year. We also use a formal feedback process which follows the schedule below: December Tutorials: All Employees: Overview of Performance Management Process & How to Conduct a Quality Self-Evaluation; SMART Goal Setting Managers: How to Give Effective Feedback and Construct a Quality Review & Calibration Sessions Performance Review Timeline is distributed and posted Company Goals and Functional Goals are completed for the coming year January Executive Leader officially launches Performance Management cycle with global communication Employee Self-Evaluation (2 week period) Goal development process launches Jan / Feb Manager completes performance evaluation Secondary Manager reviews & approves Manager reviews goals & approves Feb / Mar Face-to-Face Appraisal Discussions & Review Sign-off Managers make Merit Increase recommendations Secondary Level Manager Approves Merit Increase Recommendations April 1(depending Merit Adjustments implemented on payroll cycle) First week of April Merit Communication to Employees prior to receipt of increase in pay statements 2

3 2018 Performance Year Important Dates (all are expressed as 2019 dates) II. GOALS & OBJECTIVES Company Goals & Objectives: Werner Co. sets annual goals for the plan year. These include metrics such as EBITDA, Operating Cash Flow, productivity and revenue increases and people leadership expectations. Functional Goals & Objectives: Each function creates overall goals and publishes them so employees can align with and support the functional goals. This is in effort to have all employees in a department or function working towards a common goal for the betterment of the department or function. Similar to Company Goals, it helps to provide visibility to what the overall Department Head or Executive Leader needs to achieve in the new year. Individual Goals & Objectives: Personal and professional goals that employees set on a short-term basis. These should extend beyond the job description and align with departmental, functional and overall Company Goals. Note that, in the performance review document, goals & objectives are weighed at 60% in the calculation of the overall performance rating score. 3

4 III. COMPETENCIES Competencies: In addition to Goals & Objectives, the Performance Review form requires employees to demonstrate competencies in 5 core areas. In the performance review document, competencies are weighted at 40% in the calculation of the overall performance rating score. Core Competencies: Customer Focus Teamwork Drive For Results Communication Integrity IV. ROLES & RESPONSIBILITIES a. Employees: Employees are accountable for their performance and development throughout the year. They should not expect the company nor their manager to be completely responsible although the manager is expected to provide feedback, coaching and support. Employees are responsible for tracking their performance during the year against their goals and competencies. Employees must complete the required steps of the performance review process by completing their self-assessment in the Halogen System by the communicated due date. Employees are expected to be honest in their self-evaluation feedback and performance rating. Employees are required to meet with their manager to review the appraisal and be open to the feedback provided. If there is disagreement, it should be addressed in a professional manner and using specific examples helps in better understanding why a disagreement may exist. Develop goals for the new year and discuss/align with their manager. b. Managers: Managers are responsible for tracking employees progress throughout the year according to their goals and competencies. Managers need to review employees self-evaluations and provide their feedback by the communicated due date. Managers should provide value-added feedback in their commentary including specific examples to help illustrate a point. They will be expected to differentiate performance levels among employees based on their overall performance and performance rating score. Managers are responsible for scheduling the face-to-face (or virtual) review discussion. They should send the appraisal form to the employee 1-2 days prior to the meeting to allow the employee time to review the feedback prior to the discussion. Managers are asked to remain open to feedback from employees as this is intended to be a collaborative process with two way dialogue. A performance 4

5 rating score may be adjusted if the manager is influenced by the employee to change the rating. Managers assist their employees with developing their goals for the coming year. c. Human Resources: Guides the Performance Review process and establishes the tools to manage the process. Provides support to employees and managers throughout the year in the various performance review activities, performance improvement plans (PIPs), professional development/career pathing, compensation adjustments, and promotional actions. Provides training to Employees and Managers (see Training section). Process Quality Assurance - Reviews performance evaluations for quality and objectivity and provides feedback positive and/or improvement opportunities throughout the performance review cycle. Distributes communication messages periodically, especially during year-end activities. Provides periodic progress reports to Employees, HR Team Members, Managers and Executive Leadership Team to ensure accountability at each step of the performance management review cycle. V. TRAINING: A number of trainings are available for Werner Co. associates to ensure the performance review process is understood and utilized properly. These trainings are available all year long to employees via the Performance Management website. New Hire Training Gives new employees and managers high-level exposure to the performance review process, WernerCo s philosophy on managing performance, and provides a demonstration of the Halogen tool. Formats: Webinar Performance Review Process for Employees Provides employees insight into the review process, scoring, how to write an effective self-evaluation, and Halogen overview. Formats: Webinar or Live Training Performance Review Process for Managers Provides managers with tips on writing effective performance reviews, avoiding common pitfalls, scoring, and properly managing challenging feedback discussions. Formats: Webinar or Live Training Writing S.M.A.R.T. Goals Provides all employees with training on how to write effective goals using the SMART methodology (Specific, Measurable, Achievable, Realistic, and Timebound) and leads employees through an activity taking an actual goal and turning it into a SMART goal. Formats: Webinar or Live Training Calibration Sessions A facilitated discussion with leaders from across various business units. Each leader brings 1-2 goals and results from their direct reports and then provides a numerical score (1 to 5, 5 being the highest score) that they believe matches the result. The other managers then provide their opinions on how they would have scored the employee and their justification. Where there are differences, they are discussed in a professional manner and often times the original score may be adjusted based on new information. This is in an effort to have all managers aligned in their scoring and is done prior to the performance review feedback being given to ensure better consistency of scoring through the company. Format: Live Facilitation 5

6 Additionally, Halogen offers tutorials on using the software that are also available on the Halogen Performance Management website VI. TOOLS & RESOURCES Halogen: Halogen is the cloud-based software tool Werner Co. uses on a global scale to administer the performance review process for salaried associates. It is managed internally through the Shared Services HR Department. It is accessible 24/7, 365 days a year to allow for year-round development and feedback. It allows Werner to effectively manage, track, report, and administer various components of the performance review process including completion rates, training, and automatic reminders. It houses historical information dating back to its inception in 2012 which is helpful to track development opportunities as well as talent management and career progression. Performance Management Website: Detailed information regarding the Performance Management Process, a link to Halogen, Training links, Performance Review Timelines, and other important information is housed on Werner Co. s intranet under: Departments > HR > Performance Management. Direct link provided here: Performance Rating Scale: The rating scale ranges from 1(lowest score) to 5 (highest score). A rating of 3 means the goal or competency was fully met and on target. 6

7 VII. ELIGIBILITY & MID YEAR CHANGES New Hires: After 60 days of employment, new hires should enter goals in the Halogen tool to properly guide their focus for the remainder of the calendar year. Performance Review Employees hired after October 1st, are not required to have a performance review and will not be included in the performance management process until the following year. Merit Increase Depending upon individual, functional and Company performance, employees are entitled to a merit increase about April 1st of each calendar year for the prior year s performance. New hires will appear in the Manager s ecomp section of Halogen provided they were hired by December 31st of the prior calendar year. It is possible, therefore, that an employee hired after October 1st (Q4) is eligible for an increase without a formal performance review guiding the recommended increase. Managers are advised how to handle new hires and increases in the Compensation and Merit Process section. Mid-Year Job Changes If an employee changes jobs mid-year, they should update their goals in Halogen accordingly. They can end their prior goals and create new goals which will have to be approved by the new manager (or existing manager if their manager has not changed). Mid-Year Manager Changes If an employee s manager changes, they should plan on meeting with the new manager to review existing goals and ensure the new manager is supportive of the goals. If changes need to be made, the Halogen system allows for updates and edits during the calendar year. New managers or managers changing to another team should evaluate their team s goals and reach out to employees individually to review goals and make adjustments accordingly. VIII. COMPENSATION AND MERIT PROCESS Werner Co. strives to compensate employees with market competitive salaries and benefits. Market reviews and benchmarking analyses are done regularly to ensure our compensation program is fair and competitive. There are a number of ways in which employees salaries are adjusted throughout an employee s tenure at Werner which are described below. Merit Increases: Depending upon budget and individual performance, employees may be eligible for merit increases each year. These are typically granted about or on April 1 st. Merit increase budgets are determined on a location-specific basis and may vary based on budget and local labor market conditions. The budget for each respective area is communicated shortly before the merit increase recommendations process begins. Merit increases are processed within the Halogen ecomp module and recommendations based on budget and performance are calculated for managers within the tool itself. Managers should consider their merit budget targets and differentiate performance and merit 7

8 increase amounts with larger rewards being reserved for top performers and smaller increases being granted to solid and lower performers. New hires are eligible for merit increases if hired prior to December 31st of the prior year; however, managers should prorate their merit increase amount based on the shorter tenure. It is acceptable and often appropriate to not grant any merit increases to new hires (assuming their job offer was already fair and market competitive for the employee s skillset and experience). Employees whose base salary may be either near or even above the top of their salary band are commonly referred to as salary-capped or red-circled employees. In these circumstances, a manager may enter a lump sum adjustment equivalent to the amount of the desired merit percentage. Werner has six Salary Broad Bands which differ based on geographic location. Salary compensation analysis tools developed by reputable third party compensation consultants are regularly utilized when making promotional or merit adjustments as well as for new hire offers. Please work with HR as they can assist you by providing objective compensation data in salary analysis discussions/decisions. Salary Adjustment: Employees may be entitled to salary adjustments outside of merit increases or promotional moves. This typically occurs when an employee s base salary falls below the standard market pay for that particular region/geography. A market analysis/benchmarking study is typically done by HR when a salary adjustment is being considered to justify the adjustment as well as provide a new recommended salary. A Promotional/Salary Adjustment Form is completed by the direct manager and approved by the respective executive leader. Human Resources will prepare a letter confirming the promotion for the manager to provide to the employee and a copy is placed in the employee s personnel file. Bonus Programs: Where eligible, please refer to the WernerCo. Management Incentive Compensation Plan (MICP) or Sales Incentive Plan(s) for detailed information on possible bonus incentives. IX. PROMOTIONS & DEMOTIONS Promotions: Promotions can be made throughout the calendar year and this is a separate process which is outside the merit increase recommendation process. A brief blackout period on promotions occurs each year during the merit increase review process in which promotions cannot be made. The specific dates of the blackout vary slightly each year based upon the merit increase process timeframes, generally from mid-february to early April. See the Timeline above for this year s blackout dates. 8

9 In-role promotions are warranted when an employee has demonstrated strong performance in their existing role and if the business has a need for the position to be upgraded to a more senior level, including increased responsibilities. (e.g., A promotion from an Accountant to a Senior Accountant). Note: Not all positions are eligible for an upgrade to a senior level. A Promotion Justification/Salary Adjustment recommendation form must be completed including justification along with a revised job description. The justification must be approved by the direct manager and the respective executive leader. Depending upon the additional responsibilities, the employee s current salary, departmental budget, and internal equity considerations, a salary adjustment may be warranted. Generally, promotional increases average around 10%, however, they may be either higher or lower based on a number of different factors which are evaluated on an individual basis. A Human Resources representative will provide a recommendation and review with the employee s manager. Human Resources will prepare a letter confirming the promotion for the manager to provide to the employee and a copy is placed in the employee s personnel file. Employees may also be promoted when they apply for internal opportunities and when accepting a role which moves them into a higher salary band. Promotions and Bonus Eligibility If an employee is promoted into a role that is bonus-eligible, they will receive a letter which provides them with their bonus percentage entitlement and a copy of the MICP or Sales Incentive Plan (depending upon location/function/department). Their bonus would be prorated based upon the date of promotion. If an employee is already bonus eligible and is promoted into a position with a higher bonus target, the bonus calculation will be prorated based upon the number of months in each positon. Demotions: A demotion is the term used to describe a decrease in title, scope and responsibility either voluntary or involuntary. A demotion may be initiated when: An employee is not performing well in their current role but may add value in another department, a different role or in a role with less responsibility. This typically occurs after attempts to improve performance have not been successful (e.g., as the result of a Performance Improvement Plan (PIP) or disciplinary process). The business no longer needs the role or as the result of a reorganization or restructure. An employee may be moved into a lower level role or another role that is a lesser responsibility and/or scope but which has a viable business need. An employee expresses a desire to voluntarily step back in scope or responsibility either due to a personal reason or they are not satisfied with the responsibilities that go along with their current role. Salary adjustments to base pay and bonus are often considered when an employee is demoted. The new salary and bonus, if applicable, should reflect the employee s new 9

10 responsibilities. Human Resources should be consulted to provide a salary analysis and a new job description which may need to be developed to support the employee s new role. There may also be rare circumstances in which an employee s salary is not adjusted but this consideration must first be evaluated and approved by executive leadership and Human Resources along with appropriate justification as to why the compensation would not change. X. PERFORMANCE IMPROVEMENT PLAN Performance Improvement Plan (PIP): A PIP is typically administered when an employee s performance falls below expectations. It may be accompanied along with progressive disciplinary steps or separately to formally review concerns and deficiencies as they relate to performance and/or behavioral issues which are impacting the employee s performance and/or the performance of the department/company. In conjunction with Human Resources, the employee s manager is typically responsible for writing the PIP and issuing it to the employee. The PIP should highlight the concerns, expected improvement, measurements to determine improvement, tools/resources available to assist in their improvement, a timeline for expected improvement and the consequences if the performance does not meet expectations. If performance does not improve, this may initiate the Company s Progressive Disciplinary Steps, or, if already in progress, it may progress to the next disciplinary level which could include termination. Therefore, it is important to involve a member of the Human Resources department when initiating a PIP or the Progressive Disciplinary Process. It should also be noted that the company is not under any obligation to utilize a PIP or a progressive disciplinary process as its employees are employed at-will and the decision to use or not use this procedure is at the sole discretion of the company. When an employee s Overall Score in the Performance Review is below a 3.0, a member of Human Resources will review the employee s performance with the employee s manager and together they will determine whether a PIP should be administered to attempt to improve performance to an acceptable level. 10

11 APPENDIX A COMPETENCIES CUSTOMER FOCUS Personally demonstrates that external (or internal) customers are a high priority. Identifies customer needs and expectations and responds to them in a timely and effective manner. Anticipates and prevents delays or other things that can adversely affect the customer. Keeps customers informed about the status of pending actions and inquiries about customer satisfaction with products or services. This is in sharp contrast to behavior patterns that tend to disappoint customers, leave them feeling forgotten and unimportant or that otherwise result in unmet needs or expectations. TEAMWORK An effective team player adds complementary skills and proactively contributes valuable ideas, opinions and feedback. Effortlessly communicates in an open and candid manner and can be counted upon to fulfill any commitments made to others on the team, often initiating team efforts. This is distinctly different from those who withhold ideas and opinions, offer ideas or opinions that rarely add value to team discussions, demonstrates unacceptable behaviors toward coworkers, has established a track record with many unmet commitments, and/or has not contributed skills which complement the skills of others on the team. DRIVE FOR RESULTS (RESULTS ORIENTED) Achieves results within established timelines, understands and demonstrates that intentions, activities and results are not the same. Produces a high quality of work, expects that obstacles will occur and refuses to use them as an excuse for not achieving results. Anticipates or addresses unforeseen obstacles and seldom gets derailed by them. This compares favorably to those who seek to justify poor results by describing intentions or activities that often get derailed by obstacles, fails to take effective steps to avoid or overcome them, and/or who frequently misses deadlines without giving advance notice. INTEGRITY Acts in ways that demonstrate personal integrity and serves as a positive example of why others should trust the motives of the organization. Views himself or herself as a reflection of the organization by following through on commitments and accepting ownership of any mistakes he or she might make. Leaves others with the clear impression that integrity is a core value at this organization. This is in contrast to individuals who make commitments that go unmet, fail to acknowledge their role in disappointing events, or whose actions do not support the company s cultural values. COMMUNICATION Communicates effectively and appropriately. Uses good judgment as to what to communicate to whom as well as the best way to get that accomplished. Speaks in a clear and credible manner, selecting the right tone for the situation and audience. Listens to others and allows them to make their point. This is quite different from those who tend to select the wrong means of communicating, or who communicate information to an inappropriate audience. It also contrasts with those whose messages are not clear or lack credibility, as well as those who demonstrate poor listening skills and not open to the opinions of others. 11